Claim House Building Loan Interest Tax Exemption

• Sections 24(b) and 80C are the key sections relating to construction loan tax benefits.
• You can enjoy the house building loan interest tax exemption of up to ₹2 lakh, subject to the fulfillment of the conditions mentioned in Section 24(b).
• In the case of the principal amount, you typically qualify for a deduction of up to ₹1.5 lakh, provided you meet the applicable Section 80C conditions.

Buying a home is undoubtedly a significant milestone. What if you get to decide the layout of your house from the start? Sounds exciting, doesn’t it?
By taking a construction loan, you can build a house exactly tailored to your needs. You can also keep a close tap on the materials used and ensure the quality and pricing are well within your control.Additionally, this loan offers tax benefits, including house building loan interest tax exemption.Wouldn’t you want to know what these benefits are and how they help maximise effective tax management? Read on as we explore the applicable tax benefits in detail. Also Read: Important things to know about Home Construction Loans

Sections 24(b) and 80C are the key sections relating to the house building loan interest tax exemption and others. Let’s take a look at each of these sections individually: Benefits on the Interest Portion under Section 24(b) This Section particularly deals with house building loan interest tax exemption. It allows you to claim a deduction on the interest paid on your construction loan.You can enjoy a house building loan interest tax exemption of up to ₹2 lakh, subject to certain conditions. However, you can claim this deduction if the construction is completed within five years of taking the loan.Also, it is worth noting that the interest expense incurred during the pre-construction period is allowed in five equal instalments once the construction of the property is completed.

After learning about house building loan interest tax exemption, you may be keen to know about deductions in the case of principal amount paid. Section 80C governs the deductions in this case.You can claim a deduction of up to ₹1.5 lakh after the property construction is completed. However, ensure compliance with the relevant provisions laid down in Section 80C.

In addition to house-building loan interest tax exemption, you can claim a deduction on the principal portion. This helps reduce your overall tax burden and contributes to effective financial planning.You can further improve your financial planning by optimising your loan repayment strategy through a flexible repayment schedule. A flexible schedule helps you meet your EMI obligations comfortably.Curious to know how you can build a flexible schedule? Talk to an Aditya Birla Capital representative today.