What are the tax benefits of a home loan? Did you know that the most common form of tax benefit is a
tax deduction? Tax laws that allow you to deduct taxes to meet certain eligibility requirements are tax
benefits. As a professional, you need to do tax planning every year. You should make wise investments
as your income increases to reduce your tax burden. There are many tax-saving investments, and
among them, home loans are long-term purchases, which attract a tax deduction for the interest earned
on them.
Get a home loan to fulfil your
dream of buying a home, and also to save on taxes, which you pay at the end of
the year. The Indian government encourages its citizens to buy houses by
offering tax advantages on their home loans. You are eligible if you take out a
home loan for the purchase or construction of a home and, in the case of
construction, it must be completed within 5 years.
Tax breaks for home loans in 2022
Download One by One Preparation Excel Based Software Form 16 Part B for the F.Y.2021-22
With the additional tax deductions
on home loans announced by the finance ministers union in the previous
financial statements, applicable for the 2021-22 financial year, you can enjoy
tax breaks from the old tax regime through exemptions and deductions. The tax
benefits of a home loan are detailed below.
Reduction of repayment of principal
There are two components of the EMI
that you pay out and those are the principal amount and the interest amount.
For independent property, you can claim the principal amount paid back at EMI
as a deduction under section 80 C of the 1961 Income Tax Act. If you have a
second home, where your parents live or it is vacant, it will also be your
home. private property.
You are entitled to a tax deduction
of up to 1.5 lakhs on the principal amount you paid at EMI for both homes,
purchased using a home loan. If a second home is rented, it is considered a
rental property and you are still eligible for the home loan tax benefits. You
can also claim registration and stamp duty issued on your home purchase.
Interest payment reduction
Download One by One Preparation Excel Based Software Form 16
Part A&B and Part B for the F.Y.2021-22
The tax deduction on a home loan
also includes interest paid on the mortgage. Under Section 24(b) of the Income Tax
Act, you are entitled to a home loan tax benefit of up to 2 lakhs for a
detached home. If you own a second home, the total tax deduction on a home loan
for two homes cannot exceed 2 lakhs in one financial year.
If it's a rental property, you have
no upper limit on claiming interest. However, the loss you can claim based on
Home Ownership Income has limited to Rs 2 lakh only. The remaining losses can
be carried forward for 8 years for homeownership income adjustments.
Additional deduction based on 80EE
bagian section
Download and Prepare at a time 50 Employees Form 16 Part B for the F.Y.2021-22
You can take advantage of these
home loan tax advantages if you take out a loan in the 2022-23 financial year.
Under section 80EE, you are entitled to an additional deduction of Rs. 50,000
plus a discount of 2 lakhs on interest paid, provided the following conditions
are met.
• The loan amount should not exceed
Rs 35 lakh and the value of the property you are borrowing should be Rs 50
lakh.
• You should have received
sanctions between April 1, 2016, and March 31, 2017.
• This discount applies to
homeowners and first-time homeowners only.
Extra cut under the 80EEA section
for an affordable home
You can request an additional
deduction of up to Rs 1.5 lakh on the interest paid on the home loan. To get
home loan tax benefits under Section 80EEA, you must meet the following:
• The stamp duty on residential
properties must be a maximum of 45 lakhs.
• You must have used the loan
between April 1, 2022, to March 31, 2023.
• You must be the first home buyer
by the date the loan is approved.
• To apply for a deduction under
this section, you must not be eligible to apply for a deduction under section
80EE.
Download and Prepare at a time 50 Employees Form 16 Part A&B
for the F.Y.2021-22
Deductions on joint home loan
If you have a joint home loan
account with IDFC First Bank, any borrower can apply for a home loan tax
benefit on taxable income. Borrowers are expected to be co-owners of the
property and can claim a deduction of up to 2 lakhs each on interest and 1.5
lakhs each on the principal amount paid for the home loan.
How do I apply for tax benefits for a
home loan?
To apply for a home loan income tax
benefit, you need to make sure that:
1. The residential property is in
your name and, in the case of a co-mortgage, you must be one of the co-owners.
2. Property construction is
complete.
3. You get a certificate from the
bank detailing the interest and principal amount paid.
4. Your employer knows the tax
benefits of your home loan application and adjusts the TDS accordingly.
5. You have calculated the amount
that will be required as a tax deduction.
