Unlocking Savings: Know about Housing Loan Tax Benefits

As per the Income Tax Act 1961, there are various sections that allow home loan borrowers to save on taxes. It can help people save a significant amount of their money in the form of tax deductions. This blog will explore the housing loan tax benefits and how much one can save because of it.

What are the tax benefits of housing loans?

Upon applying for a home, one becomes eligible for tax deductions under different sections of the Income Tax Act. The following points explain how the three sections can help a borrower in saving money:

1. Section 80C: People can get a maximum of Rs.1.5 lakh tax exemption on the principal amount repaid. It includes both registration and stamp duty.
2. Section 24(b): It enables every home loan buyer to enjoy tax deductions up to Rs.2 lakh on the interest paid.
3. Section 80EEA: This allowed one to enjoy tax benefits up to Rs.1.5 lakh on the interest paid on the home loan. However, this can only be availed by an applicant who availed a home loan between 1 April 2019 and 31 March 2022.

Note: If any loan borrower has opted for the new tax regime, they are not eligible to claim any tax deductions as per Section 80C or 24(b).

How to get income tax benefits on your housing loan?

There are some strict eligibility criteria that people have to meet in order to enjoy the tax benefits on home loans. However, these conditions vary for each section.

Section 80C

• One can claim a maximum of Rs.1.5 lakh as a deduction for the principal loan amount repaid under this Section.
• Along with this, stamp duty and registration fees are also eligible for tax exemptions. However, people have to claim it in the same year they incurred it.
• Home loans taken for buying or constructing a new house are only eligible for the deductions.
• If anyone who plans to sell the house within the next five years from the year-end in which it was purchased, will not be eligible for these deductions. In case they claim it, the exemptions will be reversed and counted as their income in the year of sale.

Section 24(b)

• Under this section, one can enjoy housing loan tax benefits up to Rs.2 lakh on the interest paid on the home loan. These deductions are applicable on self-occupied properties along with empty residential houses.
• These tax benefits are applicable only on homes that are purchased or established after 31 March 1999. Other than this, houses were constructed within the next years from the year-end in which the home loan was taken.
• In the case of homes purchased or established on or before 31 March 1999, the tax benefit is restricted to Rs.30,000. It is also applicable on loans that are taken after 31 March 1999, for renovation or repairing a house.

Section 80EEA

• This tax exemption can only be availed by one if they are buying a house for the first time. In case, an individual has already availed of any other tax benefit for any property, they are not eligible for this section.
• This section can only be availed by people who have availed a home loan between 1 April 2019 and 31 March.
• One can get a maximum deduction of Rs.1.5 lakh, as per Section 80EEA.

Various financial institutions offer pre-approved loans to loyal customers in the form of different products like home loans and loans against property depending on the customer’s creditworthiness. These offers make the loan application process smooth and provide one with better repayment terms. Interested people can check their eligibility easily to find out the pre-approved loan offers online by filling in the required information like their name, email, etc. on the lender’s official website.

Buying a home is a dream for every person but is not feasible for most without a home loan. Hence, one should not feel that a home loan is just a big liability as it provides people with different housing loan tax benefits.