Home loan tax benefits in India- Know the important factors - Loan Trivia


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Thursday 21 October 2021

Home loan tax benefits in India- Know the important factors

 Like every other loan, potential borrowers need to pay taxes to the Indian government for home loans. But under some scenarios, individuals can enjoy home loan tax benefits in India. 

Hence, it is imperative to be aware of the vital factors related to home loan tax benefit in India

Given below is an illustration of these:

  • Stamp duty payment

The charges for stamp duty vary across states. As per Section 80C, an exemption on stamp duty charges can be availed up to an amount of Rs.1,50,000. However, home loan applicants must note that this is a one-time exemption option and can be availed only one time in a year.

  • First-time property owners

According to Section 80EE, first-time property owners can avail an exemption of Rs.50,000 on the interest payable during every financial year. However, for this claim, they must note that the amount should not be greater than Rs.35,00,000.

  • Repayment of home loan principal

As per Section 80C of the Income Tax Act, potential borrowers who apply for home loan can avail an amount of up to Rs.1,50,000 as a tax deduction for the principal loan repayment. Individuals should note that this cannot be availed on the loan’s interest component.

  • Post-construction interest payment

Section 24B deals with the exemptions applicable on interest payments after the full construction of a property. For a self-occupied house, out of the paid EMIs for a year, a potential borrower can claim tax deductions amounting up to Rs.2 lakh. However, this is conditional on the borrower’s prescribed home loan interest rate.

Individuals looking to apply for a home loan can use a home loan calculator to compute the EMIs payable before applying. This will help them manage the loan payments better.

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