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♦ Home loan rebate in income tax

Home loan rebate in income tax

Tax Benefits on Home Loan for 2019

Home loan can reduce our tax as per the provisions of the Income Tax Act, 1961. Even more so after the announcements made during financial budget 2019. While a housing loan can help us get a house for ourselve, it can also turn out to an expensive affair. But the various tax benefits (Home loan rebate in income tax) that come with such a loan help us save money. Now we describe how we can make the most of these benefits.  Income tax Department provide Tax Benefits on Home Loan in incometax. In this section we read full details about home loan rebate in incometax.

Rebate for Interest Paid on Housing Loan

Home loan must be taken for the purchase/construction of a house and the construction of the house must be completed within 5 years from the end of financial year in which loan was taken. If we are paying EMI for the housing loan, it has two components – interest payment and principal repayment. The interest portion of the EMI paid for the year can be claimed as a deduction from our total income up to a maximum of Rs 2 lakh under Section 24. From Assessment Year 2018-19 onwards, the maximum deduction for interest paid on Self Occupied house property is Rs 2 Lakh. For let out property, there is no upper limit for claiming interest. However, the overall loss one can claim under the head of House Property is restricted to Rs 2 lakh only. This Deduction can be claimed from the year in which construction of the house is completed.

Rebate for interest paid towards home loan during pre-construction period

We bought an under-construction property and have not moved in yet. But we are paying the EMIs. In this case, Our eligibility to claim interest on the home loan as a deduction begins only upon completion of construction or immediately if we buy a fully constructed property. The income tax law provides for the claim of such interest also, called the pre-construction interest, as a deduction in five equal installments starting from the year in which the property is acquired or construction is completed, over and above the deduction we are otherwise eligible to claim from our house property income. However, the maximum eligibility remains capped at Rs 2 lakh.

Rebate for Principal repayment

The Principal portion of the EMI paid for the year is allowed as deduction under Section 80C. The maximum amount that can be claimed is up to Rs 1.5 lakh. But to claim this deduction, the house property should not be sold within 5 years of possession. Otherwise, the deduction claimed earlier will be added back to our income in the year of sale.

Deduction for Stamp Duty and Registration Charges

Deduction for stamp duty and registration charges can also be claimed u/s 80C but within the overall limit of Rs  1.5 lakhs. However, it can be claimed only in the year in which these expenses are incurred.

Additional deduction under section 80EE

Additional deduction under Section 80EE is allowed to the home buyers for maximum up to Rs 50,000. To claim this deduction, the amount of loan taken should be Rs 35 lakhs or less and the value of the property does not exceed Rs 50 lakhs. The loan must have been sanctioned between 1st April 2016 to 31st March 2017. And on the date of sanction of loan, individual does not own any other house. Section 80EE has been reintroduced effective from FY 2016-17. Earlier the deduction allowed under Sec 80EE was available for 2 years FY 2013-14 and FY 2014-15 only.

Additional deduction under section 80EEA

The budget 2019 has introduced additional deduction under Section 80EEA for home buyers for maximum up to Rs 1,50,000. To claim this deduction, the stamp value of the property does not exceed Rs 45 lakhs. The loan must have been sanctioned between 1 April 2019 to 31 March 2020. And on the date of sanction of loan, individual does not own any other house. The individual should not also be eligible to claim deduction under section 80EE.

Deduction for Joint Home Loan

If the loan is taken jointly, then each of the loan holders can claim a deduction for home loan interest up to Rs 2 lakh each and principal repayment u/s 80C up to Rs 1.5 lakh each in their individual tax returns. To claim this deduction, they should also be co-owners of the property taken on loan. So, loan taken jointly with our family can help us claim a larger tax benefit.

Software By..  Sh. Heera Lal Sir

छूट का प्रकार 

सेक्शन 

अधिकतम छूट राशी 

छूट की कंडीशन 

Principal

80c

1.5 Lakh

house property should not be sold within 5 years of possession

Interest

24b

2 Lakh

loan must be taken for purchase/construction of a w house and the construction must be completed within 5 years from the end of financial year in which loan was taken

Interest

80EE

50,000 Thousand

amount of loan taken should be Rs 35 lakhs or less and the value of the property does not exceed Rs 50 lakhs

Stamp Duty

80C

1.5 Lakh

can be claimed only in the year in which these expenses are incurred

Interest

80EEA

1.5 Lakh

The stamp value of the property should be Rs 45 lakhs or less. The taxpayer is not eligible to claim deduction under section 80EE

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