How much tax can be saved by home loan?

Hey there, If you are wondering how much tax can be saved on home loan. You have come to the right place. Taxes and loans have often confused people as there are many details to remember. My husband works in a bank and he has shared some pointers with me. I will now answer your question to the best of my ability. 

Getting a house requires planning your finances carefully. According to the provisions set by the Income Tax Act of 1961, you can save tax when you take a home loan. You can get certain tax benefits that come with taking a home loan. You can claim deductions in your income tax against both the principal and interest payments that you will make towards repayment of your home loans. The amount of tax you save will depend on the current tax laws of the Government of India.

• Under section 24 of the Income Tax Act, the maximum deductible amount is Rs. 2 lakh per annum.

• Under section 80 C of the Income Tax Act, the maximum deductible amount is Rs. 1.5 lakh per annum.

• Under section 80 EE of the Income Tax Act, the maximum deductible amount is Rs.  50,000 per annum.

I hope my answer about how much tax can be saved on home loan helps you out.

The Government of India always comes up with new initiatives for people to purchase houses in India. The Indian Government not only comes up with different schemes related to building/ purchasing houses but also helps in tax exemption if someone is availing home loan. Let me share with you how much tax can be saved on home loan if you are thinking about purchasing a house.

Under Section 80C you can apply for a tax deduction if you have taken a home loan. 

How much tax can be saved by home loan?

To understand how much tax we can save on home loan we should remember there are two components in a home loan: one is interest payment and the other is principal payment. If a home loan is taken before the construction of the house, the construction should be completed within 5 years of purchasing the house.

You can claim tax exemption from your income on the interest portion up to 2 lakh under Section 24.

You can claim the deduction after the completion of the construction of the house.

How much tax can I save on home loan during the Pre-construction period?

You can claim for tax exemption under pre-construction interest if you complete the construction in five equal installments. The maximum eligibility is Rs. 2 lakh.

Exemption on Principal Payment

Under section 80C you can claim for tax exemption under principal payment if you are availing of a home loan. You can claim up to Rs. 1.5 lakh only under the condition that you do not sell the property after 5 years of owning it. If you sell your property within 5 years of purchasing it, you will not get any tax exemption.

Tax Exemption on Stamp Duty

You will claim tax exemption for stamp duty and registration fee up to Rs. 1.5 lakh under Section 80C. But you can only claim it in the year you have paid the stamp duty and registration fee.

Tax exemption on a joint loan

You can get tax exemption if you add a co-applicant when you are availing a home loan. It helps you to achieve a better score and a better chance to get a home loan.

I hope my answer on how much tax can be saved on home loan was helpful.

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