Tax Benefit on Home Loan-Housing Loan Tax Benefit Section 24, 80EE and 80C

Home Loan Tax Benefit: The first house on a loan comes with multiple tax benefits. These deductions not only reduce the tax outgo but also help in managing the cash flows better. There are many deductions a person can claim while taking a home loan. It’s every one’s dream to construct a house and these Home Loans are very helpful for such persons to construct their house.

The Sections Under which Tax Benefit on Home Loan can be Claimed are Given Below:

Deduction on interest: If you are paying EMIs for a home loan you took to buy a house, the interest component in the EMI can be claimed as deduction. You must be both an owner and a co-borrower to claim tax benefits. This deduction can be claimed starting the year in which the construction of the house is completed. If your house is rented, the entire interest for the year can be claimed as deduction. 
The interest payments for the year shall result in a loss under the head 'income from house property'. This loss can be adjusted against in the same year against other heads of income in the income tax return including salary. Therefore, it reduces your total taxable income and the tax you pay thereon. 

Deduction on pre-construction interest under Section 24: Deduction for interest can be claimed starting from the financial year in which the construction is completed and you can also start claiming pre-construction interest from the same year. For this you need to add up the entire pre-construction interest and claim it in five equal installments. The total deduction, however, should not exceed Rs 2 lakh when the house is being used by you for your own residence.

Deduction on principal repayment under Section 80C: The component of the EMI which goes towards principal is eligible to be claimed under Section 80C of the Income Tax Act and you can sum up the outgo for the year towards principal and claim it. A maximum of Rs 1.5 lakh can be claimed as deduction under Section 80C.

Deduction on stamp duty and registration charges: Apart from the deduction allowed on principal repayment, payment made towards stamp duty and registration charges are also allowed to be claimed under Section 80C. However, these can only be claimed in the year in which these were paid.

Deduction under Section 80EE: In order provide tax benefit this section has been inserted first time to home owners where value of the house is Rs 40 lakh or less and the amount of loan taken is Rs 25 lakh or less. A maximum deduction of Rs 1 lakh is available under this section and can be claimed in financial years The total deduction is allowed under Section 80EE cannot exceed Rs 1 lakh. 

This section lapses in the current financial year 2015-16. So, if you meet all the conditions laid out in Section 80EE, you should remember to claim the deduction while filing the tax returns for the financial year.

For more information about home loan

Home Loan Insurance Benefits in India
Best Income Tax Saving Options for 2016 Other Than 80C
How to Save More Income Tax through Home Loan and Saving Tips
List of Documents Required for Home Loan in India
How to Pay Home Loan Part Payment Online
How to Choose the Best Tax Saving Investment Options Under 80C Section

Tax Benefit on Home Loan-Housing Loan Tax Benefit Section 24, 80EE and 80C Tax Benefit on Home Loan-Housing Loan Tax Benefit Section 24, 80EE and 80C Reviewed by amara sangati for Rating: 5