Even though for a home loan you need to pay monthly EMI it can also help you save tax as per Income Tax Act 1961. Let me share with you all the details on income tax rebate on housing loan.
You may be wondering how to apply for tax exemption and housing loan principal deduction under which section your tax will be reduced. I will tell you with a chart which can help you out in this matter.
| Income Tax Act | Maximum Deductible Amount |
Section 24 |
Rs.2 lakh per annum |
Section 80C |
Rs.1.5 lakh per annum |
Section 80EE |
Rs.50,000 |
You can claim a house loan principal deduction up to a maximum of 1.5 lakh every year.
You must include the stamp duty and registration charges in it.
The construction of the house should be completed before claiming tax for home loan deduction.
You cannot sell your house after 5 years of possessing it to claim the deduction.
If you sell your house within five years after claiming the deduction, you will need to return the tax amount again.
According to section 80EE, the worth of the property must be above Rs. 45 lakh.
There are different rules for joint home loans. I will provide the details in pointers related to deduction for interest on housing loan.
If you avail of a joint home loan, you and your co-applicant can individually claim for tax exemption. Tax can be exempted on the basis of principal paid up to a maximum of 1.5 lakh each. It should be remembered that the co-applicant should also become the co-owners to claim the deduction.
Let me provide you with a chart so that you can understand what is the exemption limit for housing loan principal.
| Deductions | Maximum Deduction | Section of the Income Tax Act | Terms |
Interest |
Rs.2 lakh |
24b |
The property needs to be constructed within five years from the time loan was availed. |
Interest |
Rs.1.5 lakh |
80EEA |
Property with stamp value up to 45 lakhs. |
Interest |
Rs.50,000 |
80EE |
If the amount of loan taken is 35 lakh and the value of the property is up to 50 lakh. |
Principal |
Rs.1.5 lakh |
80C |
The sale of property must not be executed before 5 years of purchasing the property. |
Stamp Duty |
Rs.1.5 lakh |
80C |
You should claim it in the same year you have spent. |
To claim the tax benefits you need to calculate the tax deduction and obtain a home loan interest certificate.
I hope you know the details of income tax rebate on housing loan.
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Read more:
Is Stamp Duty Tax Deductible?
Is Home Equity Loan Interest Tax Deductible For Rental Property?
Authors Of The Question
What is the exemption limit for housing loan principal?
Diashinee
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2 Year
2022-01-05T16:14:50+00:00 2022-01-05T18:22:27+00:00Comment
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