Do you own a house? Do you have a house loan you are trying to pay off? If that’s the case, you could pass on significant savings opportunities. Despite their potential significance, tax breaks associated with mortgages are frequently disregarded. Getting a house loan comes with several tax advantages that we’ll discuss in this post, along with strategies for making the most of them. Tax saving on home loan is one of the many advantages of owning a home.
1. Interest Deduction on a Home Loan
Getting home might move you one step closer to buying the house of your dreams. Repaying the loan consists of two parts: paying back the original principal amount and the accrued interest. The 2018-2019 academic year marked the beginning of the rule’s application. You may only claim this deduction if you use the home as your primary residence, and your total ‘House Property’ category losses cannot exceed Rs.2 lakh. After the home’s construction is complete, you may begin taking the deduction. As a result, if you’re set on buying a property, you should get a mortgage and benefit from the deductions it provides.
2. Deduction for mortgage interest paid during the planning period
If you have purchased an under-construction house and are paying your EMIs during the preparatory phase, you can still avail yourself of tax benefits. Under the Income Tax Act, you can claim a deduction for the pre-construction interest paid. This deduction is spread over five equal installments beginning with the year the property is acquired or construction is completed. The maximum deduction allowed is Rs.2 lakh, including current-year and pre-construction interest. So, even if you have not entered your house yet, you can enjoy the tax saving on home loan.
3. Section 80C Benefits
A house loan is attractive because of the tax benefits it offers. Repayment of your home loan’s principal amount is tax deductible under Section 80C. Both owner-occupied and rental properties are eligible for a deduction of up to Rs.1.5 million per year toward principal payments. Stamp duty and registration fees are included in this total. It is important to remember that this deduction may only be used once and that the building must be finished before the deduction can be made. In addition, if you sell your home during the first five years of ownership, any deductions you took will be nullified, and the money will be included as income in the year of sale. Understanding the rules of Section 80C is crucial for taking advantage of tax saving on home loan.
4. Section 80EE Benefits
Section 80EE provides a great opportunity to save on your tax bill and increase your savings. It allows you to avail of tax benefits of up to Rs.1.5 lakh on the interest component paid on a home loan. This benefit is over and above the existing exemption of Rs.2 lakh under Section 24(b). The property must be valued at less than Rs.45 lakh to avail of this sweet deal. This is an excellent way to lighten your tax burden and increase your savings. Make sure to check out the details before you make any decisions.
5. Home Loan Income Tax Advantages 2023
Tax breaks of up to Rs.7 lakh are available to Indians who take out a home loan between now and the end of March 2024. Section 80EE allows for a further deduction of Rs.1.5 million till March 31, 2022. Affordable housing loans fall under this category. Borrowers can save a significant sum on taxes thanks to these deductions, which can be applied to lower monthly payments. You can take advantage of tax breaks for loans taken out before March 31, 2024.
Also Read: Conveyance Deed: Meaning, Types, Purpose, Difference from Sales Deed
6. Joint Home Loan Deduction
A joint home loan is a great way to avail of tax benefits. Availing of a housing loan with two or more persons can provide you a deduction on interest payments up to Rs.2 lakhs each. The principal payments can also be deducted up to Rs.1.5 lakhs each. However, all applicants must be co-owners of the property to claim the tax benefits. So, if you want to purchase a house, a joint home loan is a great way to save on taxes!
Conclusion
With a home loan, you may reduce your taxable income in several ways. Take advantage of these tax benefits to boost your savings and give yourself more financial flexibility. A knowledgeable accountant or financial advisor can help maximize your mortgage’s tax advantages. They can advise you on how to minimize your tax liability as a homeowner and help you find the best deductions and credits.
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