The Government of India introduced several home loan tax benefits, with the vision of aiding homebuyers to save more. Here are some income tax benefits that individuals can claim on seeking a housing loan.
7 Income tax benefits advantageous for borrowers
Claiming these home loan tax benefits is advantageous to save money on taxes, which borrowers can later use for interior decorations. However, individuals must comply with these laws strictly to be eligible for deductions. Below are 7 tax benefits of home loan that have proven to be immensely beneficial to individuals seeking credit to build their dream house:
1.Deductions on interest
Debtors can claim a benefit of up to Rs.2 lakh on the interest under Section 24 of the Income Tax Act. However, it becomes essential to complete the construction of that house within five years from its start.
2.Tax benefits on principal amount
Section 80C of the Income Tax Act allows borrowers to get a tax benefit of up to Rs.1.5 lakh on the loan amount. Nonetheless, it is vital that they do not sell the house within 5 years of its possession.
3.Deductions on pre-construction interest
Individuals can claim deductions of up to Rs.2 lakh if they have invested the credit in an under-construction property. However, they will receive this deduction in five equal instalments starting from the year in which the construction of a house is completed.
4.Tax benefit on joint home loan
Each co-applicant of the joint home loan is eligible for a tax benefit of up to Rs.2 lakh on the interest. Additionally, there are several other benefits of taking a joint home loan that borrowers can explore.
5.Deductions on stamp duty and registration charges
Under Section 80C of Income Tax Act, individuals can claim tax exemption on home loan stamp duty charges up to Rs.1.5 lakh.
6.Deductions under Section 80EEA
One can claim deductions up to Rs.1.5 lakh under this Section of the Income Tax Act. However, to qualify for this, the stamp duty for that property must be below Rs.45 lakh and the credit must be sanctioned between 1 April 2019 and 31 March 2020.
7.Tax benefit under Section 80EE
Borrowers can claim up to Rs. 50,000 as a deduction if the credit amount ranges between Rs.35 lakh and Rs.50 lakh. For this, the loan must be sanctioned between 1st April 2016 and 31st March 2017.
Considering these income tax benefits on home loan, borrowers can apply for them while constructing or purchasing their dream house. However, prior to that, they should check their eligibility using a home loan eligibility calculator, to avoid rejection.
Also, they must keep the necessary documents prepared beforehand to avoid any errors during application. Once ready, they can proceed with the application for a housing loan using a few hassle-free steps.
Steps to apply for a home loan
Potential borrowers can proceed with their application for housing loan by following the steps below:
- Visit the official website of a financial institution.
- Move to the ‘Home Loan’ tab.
- Click on ‘Apply Online’ button.
- Enter some basic personal details.
- Verify them by entering the OTP that you have received.
- Select an appropriate loan amount and tenor.
- Enter the other essential details needed.
Once completed, a representative will contact the applicant to guide him/her through the further procedure.
Additionally, there are several financial institutions that provide a pre-approved offer on secure loans such as home loans and loans against property. This speeds up the loan approval process, leading to quick approval and meeting instant requirement of funds. Individuals can check their pre-approved offers by entering the necessary details.
