8 Ways to Avail Home Loan Tax Benefits

• You can claim the eligible home loan tax exemption limit and manage your taxes effectively.
• The home loan tax exemption limit is applicable on the principal as well as the interest amount, subject to applicable provisions.
• You can also claim tax benefits on your second home, provided you fulfil the relevant conditions.

Buying a house can involve a significant expense. But do you know that you can unlock certain savings if strategically planned?Home loans offer certain tax benefits that help you reduce your tax burden and make decent savings in turn. You may be surprised to learn that there are not one, two, or three, but eight ways to avail these benefits! Opt for the ones that you qualify for and optimise your tax strategy.Let’s dive deep into these ways that maximise the home loan tax exemption limit.

#1: Principal Part of Home Loan

You can typically deduct up to ₹1.5 lakh of your principal payment from your annual taxable income. The said deduction is available under Section 80C. Here are a few things that you should know about thetax exemption limit in this regard:

• You can claim this benefit after the construction is complete.
• If you sell the property within five years from the end of the financial year in which possession is obtained, this benefit will be reversed.

#2: Interest Portion of Home Loan

You can claim tax benefits of up to ₹2 lakh for interest on your home loan under Section 24(b), subject to applicable conditions. Some of the key considerations are as under:

• You must acquire/construct the house within five years from the end of the financial year in which the loan was borrowed.
• Obtain an interest certificate proving your interest obligation on the loan.

#3: Interest for Home Under Construction

In case your home is not yet ready and is under construction, you can still avail yourself of the home loan tax exemption limit on interest. Here are a few things you should know:

• You can claim interest for both periods, i.e. before construction and after construction.
• You can claim the interest for the before-construction period in five equal annual instalments, starting from the year in which your house is acquired or constructed.

#4: Interest Exemptions for First-Time Buyers, 80EEA

You can claim the home loan tax exemption limit with regard to interest paid under Section 80EEA by fulfilling the applicable provisions, including:

• Your loan was sanctioned between 1 April 2019 and 31 March 2020.
• The stamp duty value should not exceed ₹45 lakh.
• You are not eligible to claim a deduction under Section 80EE.

Also Read: Home Loan Process - Step-by-Step Procedure to Get a Home Loan

#5: Interest Exemptions for First-Time Buyers, 80EE

If you are a first-time buyer, you can claim the home loan tax exemption limit for interest payments under Section 80EE, provided you meet the relevant conditions. Here are some of these conditions:

• The property cost is less than ₹50 lakh, and the loan amount is up to ₹35 lakh.
• Your loan was sanctioned between 1 April 2016 and 31 March 2017.

#6: Tax Benefits of Co-owned House Debts

In case you own a combined loan, here are some of the important things about the home loan tax exemption limit for your reference:

• Each borrower can deduct up to ₹2 lakh of interest under Section 24(b) and up to ₹1.5 lakh of principal under Section 80C. This doubles the number of exemptions.
• Both applicants must be owners servicing the EMIs.

#7: Registration and Stamp Duty Charges

You can get a home loan tax exemption limit on the stamp duty charges paid, provided you meet the applicable conditions. Some of these conditions are mentioned under:

• You can claim up to ₹1.5 lakh for stamp duty and registration charges under Section 80C.
• You can claim the exemption in the year in which the charges are incurred.

#8: Tax Benefits of a Second Home

In case you have taken a home loan for purchasing an additional property, you can enjoy the home loan tax exemption limit. Here are some key points for your reference:

• You can claim deductions for the principal and interest portions under sections 80C and 24(b), subject to the permissible limits.
• Earlier, the second house was considered to be let out. However, now, it is classified as a self-occupied property if it is not given on rent.

Availing the home loan tax exemption limit helps maximise tax benefits. You can explore online calculators or talk to your chartered accountant to know the exact amount of home loan tax exemption limit in your case. For this, you may need details like loan amount, tenure, interest rate, annual income, etc.Apart from the tax benefits, securing competitive interest rates is another effective way of saving. To explore customised and flexible home loan solutions, talk to an Aditya Birla Capital representative and own your dream home today!