Buying a house is the aim of nearly every individual and the government of India cheers its citizens to make this investment. As most people cannot bear to buy a house outright and need taking a Home Loan for this purpose, there are diverse tax benefits provided for taking a home loan. The diverse deductions and tax benefits on home loans have been listed below:
Home Loan Interest Paid (Post-Creation): The Equated Monthly Installments (EMI) paid on a home loan have two elements, the principal amount and the interest. Section 24 of the Income Tax Act allows an individual to affirm up to Rs. 2 lakh as an abstraction under the heading Interest Paid on Home Loan. This abstraction can be claimed from the year in which the creation of the house is completed.
Home Loan Interest Paid (Pre-Creation): If an individual buys an under-construction property, the interest paid on the home loan can be abstract in five instalments beginning from the year in which the property is bought. The maximum claim under this situation is capped at Rs. 2 lakhs
Principal Amount Paid on Home Loan: Section 80C allows for a maximal abstraction of Rs.1.5 lakhs from the income of an individual for the payment of the principal amount of a home loan. In case, the individual sells the house within 5 years of claiming this abstraction, the deducted amount will be added to the individual’s earnings in the year the property was sold.
Stamp Duty and Registration Amount: Section 80C also provides a subtraction on expenses sustain during registration of the property and the stamp duty paid, this subtraction is also subject to an all-inclusive limit of Rs.1.5 lakhs under Section 80C.
Joint Home Loans: If a home loan is taken together by multiple individuals, each individual can claim a maximal subtraction of Rs. 2 lakhs on the interest paid on the loan and a maximal deduction of Rs.1.5 lakhs under Section 80C for a principal price paid, stamp duty and registration charges.