Guide to Get Up to Rs. 5 Lakh Home Loan Tax Benefit Annually

Home Loan

When it comes to buying a new home, one of the popular options to fund the purchase is to opt for a home loan. The reason is that it minimises the financial burden incurred by the prospective homebuyer and offers a range of facilities. To further ease the process, tax concessions on home loans can be a great incentive too! In other words, you do not need to think twice before buying your dream home because you can avail up to Rs.5 lakh annually as a home loan tax benefit

For this, you need to be well aware of the tax provisions under the various sections of the IT Act to identify those that apply to you. Accordingly, you have to fill in your details in the yearly tax returns form. With the right information, proper guidance and financial planning you can save a whole lot of money every year, and this can be utilised for other purposes and financial priorities.

To know all about the home loan benefit applicable on payments made through your home loan EMI, take a look at the following pointers. 

Deductions under Section 80C for principal repayment

You can avail of tax deductions for repaying the principal on your home loan under Section 80C. Before you go through with a claim, take a look at the following pointers for additional insight on this home loan tax benefit. 

  • For self-occupied and let-out properties, you can claim up to Rs.1.5 lakh as a deduction for the principal repaid in a year.
  • The construction of the property must be completed to claim this home loan tax benefit. 
  • The property on which the deduction is claimed must not be sold for the next 5 years of purchasing it.
  • If you do sell the property within 5 years of its purchase, the deduction claimed will be reversed and the total amount will be added to your taxable income for the year of the sale. 

Deductions under Section 80C for registration and stamp duty

Under Section 80C, you can also claim the stamp duty and registration fee in the same year as a deduction. This a one-time deduction that only is claimed in the year it is incurred. Do note that the amount claimed falls under the total limit specified under section 80C, which is up to Rs.1.5 lakh. 

Deductions under Section 24B on interest payments

The interest payments made through the home loan EMI can also be claimed as a deduction under the IT act. Under Section 24B, you can claim a deduction of up to Rs.2 lakh on a self-occupied property. For a let-out property, there is no upper limit and you can claim the full amount paid as interest as a deduction.

In the case of an under-construction property, you can also claim the deduction, but there‚Äôs a caveat to note. Here, you are eligible for a pre-construction interest deduction, wherein the total interest paid is divided into 5 equal instalments with a maximum limit of Rs.2 lakh. This is only applicable if the construction is completed within 5 years and failing to meet this requirement lowers the deduction to Rs.30,000 only. 

Deductions under Section 80EE and 80EEA for first-time homebuyers

First-time homeowners can claim an additional deduction of up to Rs.50,000 on the interest paid every year under Section 80EE. This is over and above the existing interest deductions under Section 24, making a home loan a lot more cost-effective. On the other hand, under Section 80EEA, you can claim up to Rs 1.5 lakh as a deduction, provided that you meet the stamp duty requirements. Do note that only one of the above deductions can be availed at the same time.

Now that you get a fair idea about the tax benefits you can avail for a home loan, opt for a Bajaj Housing Finance Limited Home Loan to take the first step towards buying your dream home. Bajaj Housing Finance Limited ensures an easy application process thanks to the relaxed home loan eligibility criteria and minimal requirement for documentation. It also offers a lengthy tenor and offers a competitive rate in tune with the current home loan interest rates in the market.

You can apply within the comfort of your home using the e-home loan facility. If you’re already servicing a home loan, transfer it over to Bajaj Housing Finance Limited by opting for the easy Balance Transfer facility. This helps you access more suitable loan terms and allows you to keep repayment manageable all through. To find the right time to transfer to know exactly how much you stand to save, be sure to use the home loan balance transfer calculator. This easy tool provides accurate results and allows you to plan to refinance efficiently. To start your journey as a homebuyer, all you have to do is apply online by filling the simple form.

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