How to save income tax from Home loan / Housing loan?

Income Tax Benefit on Home Loan 

The 2020 Union Budget concocted the proposition to expand the income tax benefits by Rs. 1.5 Lakh on interest payments of home loans. In this way, borrowers would now be able to benefit deduction of up to Rs. 3.5 Lakh. 

This deduction is accessible under Section 80EEA which turns out revenue tax advantages of up to Rs. 1.5 Lakh on the home loan interests paid. These home loan tax benefits are accessible far beyond the current exception of Rs. 2 Lakh under Section 24(b). 

These home loan tax exemptions must be professed to buy houses with a stepped value of up to Rs. 45 Lakh. Homeowners can guarantee the advantages on loans benefited till 31st March 2021. Subsequently, borrowers will have the option to guarantee a most extreme income tax deduction of Rs. 7 Lakh. 

Income tax benefits under Section 80EEA are accessible to those profiting home loans under the PMAY CLSS scheme. 

Sections of the Income Tax Act that give tax refund on home loan: 

Sections in the IT Act           Nature of home loan deduction                Max amount deductible 

Section 80C                 Tax deductions on the repayment of principal            Rs. 1.5 Lakh 

Section 24                  Tax deductions on the payable interest amount              Rs. 2 Lakh 

Section 80EE             Additional home loan interest tax advantage

                                                          for first-time home buyers                              Rs. 50,000. 

The Government of India expands these advantages as a type of alleviation to borrowers, making it more moderate. 

Explaining the Home Loan Tax Sections in Details: 

On profiting a home loan, you have to make month to month repayments as EMIs, which incorporate two essential segments - principal amount and interest payable. The IT Act empowers borrowers to appreciate tax benefits on both these parts individually.

1. Section 80C 

Guarantee a most extreme home loan tax deduction of up to Rs. 1.5 Lakh from your taxable income on the repayment of principal. 

This may incorporate stamp obligation and enlistment charges too yet can be guaranteed just a single time. 

2. Section 24 

Appreciate greatest deductions of up to Rs. 2 Lakh on the interest amount payable. 

These deductions apply just on the property whose development is done inside 5 years. On the off chance that it doesn't complete inside this time period, you can guarantee just up to Rs. 30,000. 

3. Section 80EE 

First-time home purchasers can guarantee an extra Rs. 50,000 on the payable interest each financial year. 

The Home Loan amount must not be more than Rs. 35 Lakh. 

The property's value must be inside Rs. 50 Lakh. 

Some Other Conditions to Note: 

The tax exception is pertinent just when development of the property is finished, or you buy a prepared to-move-in house. 

Appreciate these tax benefits each year and spare huge amounts. 

In the event that you auction the property inside 5 years of its ownership, the guaranteed benefits will get switched and added to your income. 

You may buy the property and let it out on lease. All things considered, no most extreme amount is relevant to guarantee as home loan tax exception. 

While profiting the home loan, in the event that you keep on leasing another house where is by and by dwell, you can guarantee tax benefits against HRA too. 

How Tax Deductions are made on a Joint Home Loan? 

If there should arise an occurrence of a home loan together, every borrower can appreciate tax benefits on joint home loan from his/her taxable income exclusively. One can guarantee a limit of Rs. 2 Lakh on the interest paid and up to Rs. 1.5 Lakh on the principal amount. 

The main condition is that each candidate of the lodging loan must be a co-proprietor of that private property. 

Is There Home Loan Tax Benefit on a Second House? 

In the event that you take a subsequent home loan to buy another property, tax benefits are pertinent on the payable interests. Here, you can guarantee the whole interest amount paid as no cap is applied here. 

Presently, people can guarantee just a single property as self-involved and make tax payments on the other dependent on notional lease. As indicated by the most recent Union Budget of India, a proposition has been advanced expressing that an individual can guarantee a second home as self-involved property. This plans to assist borrowers with sparing more as taxes. 

How to Claim Tax Benefit on Home Loan? 

• The cycle to guarantee tax benefits on a home loan is simple and basic. 

• Ensure the private property is in your name. If there should arise an occurrence of a joint home loan, guarantee to be the house's co-proprietor. 

• Compute the aggregate sum you can guarantee as a tax deduction. 

• Hand over your manager the home loan interest endorsement so he can change the TDS. 

• On neglecting to follow this progression, you have to record your IT returns. 

• Independently employed borrowers need not present these documents. They should keep these convenient to give if a question emerges later on. 

How does a home loan help you for income tax? 

Home loan repayment is qualified for tax deductions under the Income Tax Act 1961. Home loan interest settled up to Rs.2 lakh every year is tax deductible u/s 24. Section 80C permits deduction against principal repayment of up to Rs.1.5 lakh consistently. Extra deductions are accessible u/s 80EE and 80EEA. 

What is the greatest amount of tax deductible for a home loan? 

The greatest tax deductible for a home loan is recorded underneath under determined sections of the Income Tax Act 1961. 

• Up to Rs.2 lakh u/s 24 for self-involved house; no restriction for non-self-involved house. 
• Up to Rs.1.5 lakh u/s 80C. 
• Up to Rs.1.5 lakh u/s 80EEA for first-time home purchasers. 

Who is qualified to guarantee tax exemptions on home loans? 

An individual who has bought another house for self-occupation or to lease can guarantee tax exclusion on home loans u/s 24, 80C and 80EEA of the Income Tax Act 1961. You can likewise guarantee tax benefits on the off chance that you are a co-proprietor of the house or a co-borrower. 

Would i be able to guarantee home loan tax benefits on an under-development property? 

Indeed, you can guarantee home loan tax benefits for a property under development u/s 80C. The accompanying guidelines apply for such deduction. 

In the event that the development is finished inside 5 years, a deduction of Rs.2 lakh is material. 

For developments not finished inside 5 years, just up to Rs.30,000 is deductible. 

Is home loan assurance protection tax deductible? 

Expenses paid for a home loan security protection plan are tax deductible under section 80C of the Income Tax Act 1961 in particular if the borrower makes repayment. Under explicit conditions, where the moneylender funds such protection plan and the borrower reimburses through loan EMIs, deductions are not permitted. 

Is home loan top-up qualified for tax deduction? 

A home loan top up is qualified for tax deduction u/s 24(b) and 80C just in the event that it is utilized for - 

• Procurement/development of a private property. 
• Remodel or fix of such property. 
• Such a case ought to likewise be supported up with substantial receipts and documents.