Important Things To Know About Tax Benefits On Home Loan
It seems a big decision as you take a home loan to buy your dream home. But to support home loan borrowers government has provisions for tax deductions as per the IT Act. with the help of the rebates of these income tax benefits on home loan, you can reduce your burden for the tax liability.
Here is a list of the necessary things one must know about home loan tax benefits.
The 80 C Section Rule
Under Section 80, C deductions are done up to 1.5 lakh rupees per financial year. This applies to both salaried and self-employed individuals. If one wants to claim the benefit of this deduction, they have to retain the property within at least 5 years after getting it. If someone plans to sell it within the timeframe of the first 5 years, the claim will be reversed. Along with this, one can also claim costs involving the stamp duty and registration fees.
Section 24b Rule
In this section, one has to understand the interesting part of the home loan. For self-occupied properties, this rule specifies tax deductions of up to 2 lakhs rupees. In case your property is on rent there is no upper limit of the amount that one can claim. If someone wants to claim the home loan tax benefits under 24b, then the home loan taken should be utilized for constructing or purchasing a house.
Also, note that the 2 lakhs deduction is only valid if your construction is done within the 5 years starting from the end of the financial year of your availing the loan.
Extra Benefits For Senior Citizens
Senior citizens are allowed to claim income tax benefits under both sections. But in the case of 80C, the tax deduction is raised to 2 lakh instead of 1.5. And this rule applies to both self-occupied or let out properties.
So before you choose the best among different home loans, stay informed about the tax benefits.