The growing demands for home loans have led to financial institutions increasing the interest rates for home loans. Nevertheless, borrowers can avail tax exemptions on home loans under Section 24(b), 80EE and 80C to relax their total financial burden from the loan. Under these sections, you can avail of tax benefits on both the principal and the interest component.
Go through the below-mentioned pointers to gain a clear idea of home loan tax benefits under Section 24(b), 80EE and 80C –
Section 24 – Under Section 24(B) of the IT Act, one can claim TDS on the interest component of home loans from their annual gross income. If the house is self-occupied then one can avail tax benefits up to Rs.2 lakh if however the house is rented out, one can avail tax exemptions on the whole interest amount.
Section 80EE – Under this section, borrowers can claim a maximum amount of Rs.50,000 as tax exemptions if the loan amount is Rs. 35 lakh or less and the property value is Rs. 50 lakh. However, this section does not exist anymore. It was reintroduced as section 80EEA from the financial year 2016-17.
Post budget 2019, homebuyers can avail home loan tax benefits up to Rs.1.5 lakh if the stamp value of the property is within Rs.45 lakh.
Section 80C – Under this section, one can claim a tax exemption on the principal portion of the home loan amount to up to Rs.1.5 lakh. Under this section, one can also request a tax exemption for stamp duty and registration fees along with the principal amount. However, the total amount should be within Rs. 1.5 lakh.
The house should not be put up for sale within 5 years to avail of this tax benefit.
Individuals applying for a joint home loan can also claim home loan tax benefits provided both of them are co-owners of the property. Accordingly, understanding the above exemptions will help borrowers plan their finances accordingly.
