Saving taxes on the purchase of a residential property with a home loan is possible under Income Tax Act Sections 24, 80C, 80EE, and 80EEA. We are frequently asked about tax savings when online tax filing services India purchasing a residential property with a loan. As a result, we have created a detailed blog explaining the tax-saving schemes for residential property purchased with a loan. Sections 24, 80C, 80EE, and 80EEA of the Income Tax Act allow for tax savings when purchasing a residential property with a home loan. Tax deductions under these Sections can be claimed on either the principal or interest amount. Moreover, keep reading the blog to learn more.
The provision of the Income Tax Act clearly states that only the person who has title to the property and has taken out a loan in his name is eligible to claim the deduction on a home loan. In other words, the person must be both the owner of the property and the borrower of the loan.
Tax Advantages for Home Loans
1. Section 24: House Property Income Deductions
If the individual has taken out a home loan for the purpose of purchase or construction, any interest paid on the principal amount of the loan is exempt from online tax filing services India. Even more, this category’s subclauses are as follows:
To claim this deduction, the individual must calculate the interest amount owed to the bank or financial institution from which the loan was obtained and keep it separate from the principal repayment. Futhermore, the entire annual interest amount is deductible.
2. Conditions for Making a Deduction Claim In accordance with Section 24
To claim the maximum deduction on the loan interest amount, the person must buy or complete construction of the house within 5 years (3 years until FY 2015-2016) of taking the loan.
3. Certain Section 24 Exceptions
If a person does not occupy the house because he lives in another town for work or business. Moreover, lives in another property or rented property in the city of his employment. Moreover, he can claim a tax deduction on interest payments only up to Rs. 2 lakh. In addition, no brokerage or commission for arranging the loan or tenant is deducted while itr online filing.
4. 80C Section
The principal amount paid on a home loan is deductible under Section 80C for the fiscal year in question. In addition, the deduction available under Section 80C is the principal amount of Rs. 1,50,000, whichever is şirinevler escort less.
5. Conditions for Section 80C Deductions
The house should not be sold within the first five years of possession. If the property is sold within 5 years of possession, the previous deduction will be added back into the person’s income in the year of sale.
To claim a deduction for a joint home loan, the individuals must also be co-owners of the property taken out on loan. Any two people of legal age and sound mind can apply for a joint home loan. Moreover, there is no requirement that joint home loans be taken out only by family members.