Did you know that buying a home with a home loan can help you in saving taxes? No, this is not a joke. You can avail a home loan from an institution like Tata Capital which will let you save taxes.
So, essentially the cost of purchasing a home goes down quite a bit if you are smart enough to use the various tax deductions offered by the Indian Income Tax rules. Tax deductions are cash savings for the borrower. If you plan it well, you can actually furnish your new house with the taxes saved.
This sounds just amazing, doesn’t it! Home loans can save taxes and your money. Now here are 4 must-know home loan related tax deductions that can save your hard-earned money. Read on to know in detail.
1.Deduction on Principal Repayment
The principal portion of the home loan EMI paid for the year is allowed as deduction. The maximum amount of home loans deduction that can be claimed is up to Rs 1.5 lakh. For a borrower and homeowner to claim this deduction, the home should not be sold within five years of possession. If indeed a house bought with the help of a home loan and the tax deduction claimed is sold before 5 years, the home loan deduction claimed earlier would be added back to your income in the year of sale. So, you will end up losing the deduction. Hence, remember to claim the principal repayment tax deduction, but don’t rush off to sell the house soon. Wondering if you can get a home loan? Find out about your home loan eligibility today.
2. Deduction for Stamp Duty and Registration Charges
Not just the home loan principal, other costs can also help as income tax deduction. A deduction for stamp duty and registration charges for a home can also be claimed. Do remember this deduction should be within the overall limit of Rs 1.5 lakh. Stamp duty and registration charges are not a few hundred rupees. They can run into thousands and even cross a lakh. So, if such amounts are spent, do remember to note it down as you did for the home loan principal and interest. The deduction for stamp duty and registration charges can be claimed in the year in which these expenses were incurred. Hence, do not delay. Maintain a diary of expenses related to home loans and quickly claim the applicable deductions without any delay.
3. Deduction for 1st Time Home Buyers
Those buying a home for the first time, have one more reason to rejoice. Under Section 80EE, there is additional deduction allowed for first time home buyers for a maximum of up to Rs 50,000. To claim this unique deduction, the amount of home loan taken should be Rs 35 lakh or less. Also, the value of the home loan property must not exceed Rs 50 lakh. Home loans that do not fulfill this criterion will not be able to get the benefit even if the owner is a first time home buyer. Do note that the home loan must have been sanctioned from April 1, 2016, to March 31, 2017. On the date of sanction of such home loans, the concerned individuals should not have owned any other house. For those new buyers, this is an additional incentive that they can claim as a deduction. First time home buyer or not, find out about your home loan eligibility and go for it since real estate prices have been stagnant for quite some time.
4. Deduction for Joint Home Loan
United we stand…this is not just a slogan. Any financial goal or investment done by a couple together can lead to surprisingly positive results. Did you know that home loans taken jointly can give theirs as tax deduction? Yes, if the home loan is taken jointly, then each of the loan holders can claim a deduction. The deduction for home loan interest will be up to Rs 2 lakh each and principal repayment under Section 80C will be up to Rs 1.5 lakh each in their individual tax returns. That’s great news. To claim this interesting deduction, the joint home loan applicants should also be co-owners of the property that is taken on a home loan. Bigger is better. So, home loans taken jointly with your family can actually help you claim a larger tax benefit.
Check your home loan eligibility criteria first and then avail the home loan. Institutions like Tata Capital have a section online to check the same. You need to know that your eligibility matters a lot while availing a home.
So whoever said a home loan is a bane definitely did not know about these tax benefits, you as a homeowner can avail!