How to Declare Home Loan in Income Tax?

Do you want to know the steps for

home loan declaration for income tax? Let me share my insights regarding the same.

What is the Process of House Loan Declaration in Income Tax?

• You can claim a deduction on the interest paid on your home loan under Section 24 of the Income Tax Act. For self-occupied properties, the maximum deduction allowed is ₹2 lakh per financial year.

• For properties that are rented out or deemed to be let out, there is no upper limit on the interest deduction.

• The interest must be paid during the financial year to claim the deduction. Pre-construction interest can be claimed in five equal installments starting from the year of completion of construction.

• The property must be acquired or constructed within five years from the end of the financial year in which the loan was taken.

• The repayment of the principal amount of the home loan is eligible for a deduction under Section 80C of the Income Tax Act. The maximum deduction allowed under this section is ₹1.5 lakh per financial year, which includes other eligible investments such as PPF, EPF, life insurance premiums, etc.

• This deduction is available only for the repayment of the principal component of the home loan and not for the interest component.

• Stamp duty and registration charges paid at the time of property purchase are also eligible for deduction under Section 80C, within the overall limit of ₹1.5 lakh.

• First-time homebuyers can claim an additional deduction of up to ₹1.5 lakh on the interest paid on home loans under Section 80EEA, subject to certain conditions. This deduction is over and above the deduction available under Section 24.

• If you have taken a joint home loan, each co-borrower can separately claim deductions under Sections 24 and 80C in proportion to their ownership share and the extent of the loan repayment made by them.

• When filing your income tax return (ITR), you need to declare the amount of interest and principal repaid during the financial year in the relevant sections of the ITR form.

• Ensure that you maintain proper documentation, such as loan statements, interest certificates, and property documents, to substantiate your claims in case of any scrutiny by the tax authorities. 

These are the step by step guide on home loan declaration for income tax.

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You can claim up to Rs. 2 lakhs for interest on home loan deduction. This is definitely good news because after paying a huge chunk in EMI we have very little left with yourselves. Under section 80 EAA you can claim home loan deduction till March 2022 if you have applied for a home loan. Let us learn how to declare home loan in income tax.

How to declare housing loan in income tax?

To understand how to declare home loan in tax declaration we should have the important documents with us. 

• If you purchased a house and you want to claim home loan interest in an income tax return you need to provide ownership details after you purchase the property. If you are a co-owner you need to know your share in the property. On the basis of your share, you can claim a housing loan in income tax.

• You need to provide the date of completing the construction if you want to claim a housing loan in income tax. You have to construct a house within 5 years if purchasing the property. You can claim pre-construction interest and in this case you claim the interest in 5 equal installments.

• You also need to obtain a home loan certificate that has all the details of the borrower, the amount of money borrowed from the lender, and information about principal amount and interest. 

You should not sell your property within 5 years of purchasing it. If you do so, you need to pay the income tax you have claimed before.

 Now let us learn how to fill home loan in income tax declaration.

To file the ITR with house property you need to fill in details about the taxable salary in the income source tab. For this, you need Form 16 and you have to enter the information of the employer and TDS amount. You need to provide your personal info such as name, gender, address, state, date of birth and attach the documents required to claim the home loan deduction. You need to calculate the tax submit the form.

You can visit the website https://www.incometaxindia.gov.in/Pages/tax-services/file-income-tax-return.aspx to file your tax.

I hope you know now

how to declare home loan in income tax.

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