Can you really save tax with home loan

Can you really save tax with home loan

If you want to invest your money in residential property, don’t worry there is an advantage of income tax benefits for a home loan.

There are many tax deductions with a house loan.presently, every one wishes to have own home, home loans are available for salaried employees and self employed.

Home loan has tax deductions under section 80C of Rs 1.5 lakh and interest deduction upto Rs 2 lakh under section 24.

Section 80C: Tax benefit on principal amount in home loan:

The amount paid as principal amount of home loan by an individual or HUF is tax deductible under section 80C is maximum upto Rs 1.5 Lakh.

The important point that an applicant should not forget is that tax benefit is only applicable on principal amount on home loan after submission of construction complete certificate to enjoy the tax benefits.

Section 24: Tax benefit on interest amount in home loan:

It is the second option for income tax deduction on home loan.

section 24 of the income tax act,gives tax benefit on interest amount on applicant paid towards the home loan.

The maximum tax exemption allowed on this section 24 is Rs 2 lakh as per rule.

Stamp duty and Registration fees:

The stamp duty and registration fee is also tax deductible under section 80c of the income tax act.You can even claim for tax deduction paid on stamp duty and registration fees.

Tax benefits on your second house:

According to Income tax act 1961,if you have two houses in this case you can claim tax benefits on.

    Tax deduction on actual interest paid on home loan.

    Tax deduction on municipal taxes paid in which the taxes are paid.

    Tax deduction for repair and maintenance upto 30%.

Comparison between Section 80C and Section 24

 

Particulars

Section 80C

Section 24

Tax deductions allows for

Principal amount

Interest amount

Maximum Tax Deduction Amount is

Rs 1.5 lakh

Rs 2 lakh

Purpose of Loan

Purchase / Construction of a new House Property

Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property.

Restricted on sale of property

Tax Deduction claimed would be reversed if Property sold within 5 years

Nil

Basis of Tax deduction

Paid

Accrual

 

 

Conclusion:

Tax deduction on home loan is stated limit and be careful while claiming the tax benefits. While claiming the benefits according to income tax, it is essential to furnish to submit the information of interest and principal amount paid.