What are the tax benefits of taking a home loan and owning property?
Each monthly home loan installment you pay back to your lender consists of two components: part repayment of the original loan (technically called the principal repayment), and interest on the loan. Both the principal and interest payments entitle you to certain tax deductions. The deduction for principal repayment is allowed under Section 80C and the amount of the deduction is Rs.1 lakh per annum. If you take this entire deduction towards principal repayment, then you cannot avail of any other 80C option like an ELSS or insurance policy. If you take a part deduction towards principal repayment then the balance amount can be spread across other 80C options. The deduction for annual interest payments is allowed under Section 24(b). You can avail of this deduction under the following two scenarios: • Deduction for interest payment is allowed from the year in which the property is purchased or the year in which the construction is complete. • The interest paid from the date of the loan an
