Tax exemptions have been one of the most crucial reasons that home loans are beneficial. Even though the government is actively promoting affordable housing by initiating various schemes, individuals should know the home loan tax benefit to make the most of such line of credit.
What are the features of tax exemptions on home loans?
The details of each section are discussed below –
- Section 24(b)
Under this section, you can receive tax exemption on the interest amount as high as Rs.2 lakh.
It is also mandated to complete the construction of a house within 5 years after availing a home loan, failing which the limit is reduced.
- Section 80C
This section allows exemption on the principal loan amount, which can be as high as Rs.1.5 Lakh. It also allows for exemption on stamp duty and other charges related to registration of your new home.
- Section 80EEA
Under home loan tax exemptions, this section allows benefits to first-time home buyers under affordable housing schemes. The claim value fixed under this section is Rs.1.5 lakh.
However, there are a few conditions to this section –
• Stamp value of the house should not be more than Rs.45 lakh.
• Carpet area is restricted to 60 sq. m in Tier 1 cities (Kolkata, Mumbai, Hyderabad, Delhi NCR, Bengaluru, and Chennai).
• Carpet area is restricted to 90 sq. m in other cities.
The income tax benefits mentioned above are available every year until the home loan repayment is complete.
