What are the tax benefits of taking a home loan?
The tax benefits on a home loan, under the Income Tax Act, are two-fold: • Principal Repaid: Rebate under section 88 (2) of the Income Tax Act is available to individuals on repayment of the principal portion as given below Gross total income before deduction Rebate available Upto Rs.1,50,000 20% More than Rs.1,50,000 but not exceeding Rs. 5 lakh 15% More than Rs.5 lakh none Moreover, the rebate is allowed up to the maximum limit of Rs.20,000 per financial year on the repayment of the principal sums, which need not be out of income chargeable to tax of the year in which such repayment is made. • Interest Repaid: Under section 24 of the Income Tax Act, in case of self-occupied property, deduction is allowed up to Rs.1, 50,000 per annum for houses acquired or constructed with capital borrowed after March 31, 1999. This is valid provided the acquisition or construction is completed within 3 years from the end of the year in which such loan is taken. • Can I get IT certificates in the name
Home loans are eligible for tax benefits under the Income Tax Act. Homeowners can avail tax benefits on the interest component repaid under Section 24. Under Section 24 of the Income Tax Act, the maximum amount of interest that can be deducted from your taxable income is Rs 1.5 lakhs. As a result, your taxable income decreases by that amount. This limit is for self-occupied property only.
A- You can save significant part of your tax liability if you have taken a home loan. Here’s how it works: Interest paid on the home loan As per Sec 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 150,000 towards the total interest payable on the home loan towards purchase / construction of house property can be claimed while computing the income from house property. (The deduction stands reduced to Rs 30,000 in case of loans taken prior to March 1, 1999). The interest payable for the pre-acquisition or pre-construction period would be deductible in five equal annual installments commencing from the year in which the house has been acquired or constructed. This deduction is allowed only for self – occupied property. The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction of house property is eligible for deduction under section 24(b).
