For both; salaried and self-employed individuals, taking tax rebates is one of the best ways to save some extra money. There is no limitation on the use case of that money. Therefore, individuals can invest the money for the long term every year to create wealth. However, the decision depends on the individual.
Usually, home loan tax benefits are given by the Government to attract more real estate investments. As real estate investment and infrastructure plans of the country grow the real economy. For instance, if you plan to own a house, you are helping every major industry by creating demand.
Here’s how: to make the structure of the house, you will require the following things; cement, metals, bricks, pipes, and all other commodities required to build a house. You will also hire architects, engineers, and many more such professionals. Therefore, till the time construction is ready, you help create demand for all these sectors.
Once the exterior part of the house is complete, you shift towards the interior. In that case, you help in creating demand for, paint industry, curtains/cloth industry, wood industry, tiles industry, and many more. Therefore, the real estate sector as a whole attracts attention from the Government, and investors/buyers are provided with a lot of benefits.
A home loan tax benefit is one of the major benefits provided by the Government of India to home loan borrowers. Multiple Home loan tax deductions can be claimed under sections of the Income Tax Act. Sections include, Section 80C, Section 24B, Section 80EE, and Section 80 EEA.
Home Loan Tax Benefit 2022
Income Tax rebate on the home loan can be taken on both: principal amount as well as interest amount. Individuals can enjoy tax benefits under various sections of the Income Tax Act, 1961.
| Deductions | Under Section (U/S) | Maximum Deduction Amount |
| Principal Amount | U/S 80c | 1.5 Lakh |
| Stamp Duty | U/S 80c | 1.5 Lakh |
| Interest Amount | U/S 80 EEA | 1.5 Lakh |
| Interest Amount | U/S 80 EE | 50,000 |
| Interest Amount | U/S 24 B | 2 Lakh |
Conditions For Different Sections Of Income Tax Act
Under Section 80C
Under section 80C of the Income Tax Act, the maximum deductible amount is Rs 1.5 Lakh. The deduction is enjoyed upon the principal amount of the loan. Moreover, if the property is not sold within five years, then you can take a tax rebate of up to Rs. 1.5 Lakh, on the principal amount of the loan.
Also, you can enjoy tax benefits up to Rs 1.5 Lakh, on the stamp duty charges paid for the loan application.
Under Section 80 EEA
If you are a first-time home buyer, then you can avail of a tax benefit up to Rs 50,000 on the interest amount you pay every FY. Also, the loan amount should not cross Rs 35 lakhs, plus, the value of the property in total should not be more than Rs 50 lakhs.
Under Section 24
If the construction of the property gets finished within five years, you can claim up to Rs 2 lakhs, U/S 24 of the Income Tax Act, 1961. However, if the construction does not get completed within five years, you can only claim up to 30,000. Also, remember that the deduction is applicable only on the interest amount.
These are the ways to save extra money annually by purchasing real estate by a home loan. Therefore, purchasing a restate asset has many benefits, and if you buy it with a home loan you can reap more benefits.