So how do you claim tax benefits on your home loan? You can do so in 3 simple steps.
1. Calculate the tax deduction to be claimed
2. Ensure the house is in your name or you are the co-borrower of the loan
3. Submit your home loan interest certificate to your employer to adjust the tax deductible at source
In case you don’t follow the above procedure, you will have to file for tax returns independently.
But let's take a pit stop and understand what kind of income tax benefits you can avail on your home loan -
Tax deductions can be claimed on interest as well as principal amount depending on the kind of loan availed. 3. Submit your home loan interest certificate to your employer to adjust the tax deductible at source
Tax deductions under interestYou can claim deductions on your annual income on the interest paid on a home loan under section 24(b):
- If your property is self-occupied, you can claim deductions up to Rs. 2 Lakh
- If your property has been leased or let on rent, you can claim similar deductions under section 24(b).
- If you’re the co-owner/ co-borrower, your claim can be up to the maximum deductible amount under 24(b)
If you have opted for a home construction loan -
- Rs. 2 Lakh deduction applies only if you construct the property within 5 years. If incomplete, then you can claim only up to Rs. 30,000 3. Submit your home loan interest certificate to your employer to adjust the tax deductible at source
Tax deduction on principal paidSection 80C deals with principal amount deductions. - This deduction includes registration charges and stamp duty of your home
- For both self-occupied or let-out properties, you can claim up to Rs. 1.5 lakh every year Other points to remember while availing a tax deduction on principal amount -
- Your house should be a ready to move-in property in order to avail this deduction
- You should not sell your house for a period of 5 years after possession to claim this deduction
- If you sell the house within 5 years of possession, then any deduction claimed will be reversed in the year in which it is sold. This amount will also be added to your income for the year of sale. 3. Submit your home loan interest certificate to your employer to adjust the tax deductible at source
Tax benefits under 80EEAdditional interest for first-time buyers
In addition to the benefits mentioned above, you can claim additional tax benefits if you are purchasing a house for the very first time. But to claim these benefits you must
- On the date of sanction, you should have no other house owned by you
- You should have taken the loan between April 1, 2016, and March 31, 2017
- The total value of your property should be less than Rs. 50 Lakh
- The home loan amount taken must be less than Rs. 35 Lakh
- Till you repay the loan, you are eligible to claim interest up to Rs. 50,000 every year
By opting for the best home loan deals, you can save a lot of money on income tax by efficiently using the tax deductions available to you.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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