How do you claim home loan tax benefits under 80C and 80EE of the ITA? Our guide outlines the deductions and how to claim them under both Sections
Have you availed yourself of a home loan in India? If so, then following are the tax benefits you can claim under Sections 80C and 80EE of the ITA.
To incentivise home loan borrowers, the Indian government offers various income tax benefits under Sections 80C and 80EE of the Indian Tax Act (ITA). Under these Sections, home loan borrowers can claim tax benefits on the interest outgo as well as the principal repaid on the EMI amount.
Claiming benefits under 80C and 80EE of the ITA
Tax Deductions Under Section 80C
You can claim a tax deduction of up to Rs 1.5 lakh every year, on the principal repayment of a home loan under Section 80C of the ITA. As for co-borrowers, each co-borrower is eligible to claim up to Rs 1.5 lakh as principal deduction in individual tax returns.
The necessary conditions for availing of tax deductions under Section 80C are –
- The residential property should not be sold within 5 years of acquisition.
- Tax deductions can only be claimed once the property construction is entirely over.
Moreover, you can also claim tax deductions on stamp duty, registration charges, and other expenses incurred during the property transfer – with an overall limit of Rs 1.5 lakhs – under Section 80C, if claimed within the year of the expense.
To estimate the principal amount and interest outgo on your EMI payments, use a home loan EMI calculator and deduce the tax benefits accordingly.
Tax Deductions Under Section 80EE
Income tax rebates are available for first-time homebuyers under Section 80EE of the ITA. You can claim an income tax deduction on your home loan interest repayment. However, the amount allowed for deduction cannot exceed Rs 50,000 per financial year.
Furthermore, only individual taxpayers (residents as well as NRIs) can claim the deduction under Section 80EE. You can claim these tax benefits for the entire loan tenure until the home loan is repaid completely.
However, you must meet the following conditions before claiming a tax deduction on the home loan interest rates under Section 80EE –
- The property price must not exceed Rs 50 lakhs.
- The residential property must be your first home purchase.
- The home loan amount for the property should be Rs 35 lakhs or less.
- You should not own another house on the date of the home loan disbursement.
- Your home loan must be sanctioned by a financial lending institution only.
What’s more, tax deductions under 80EE can be claimed in addition to tax deductions under Section 24 of the ITA, on the EMI repayment of a home loan online. If you exhaust the 2-lakh limit under Section 24, then you can claim additional tax deductions under the section 80EE.
To Sum Up
In the long run, tax benefits can help you save money while you service a home loan since it is not a small amount.
Today, various real estate websites host information regarding property tax, approved lender list, etc. Remember to review those with the lenders before finalising any home loan deal.