Introduction
The deadline for claiming additional deductions for house loan interest payments was recommended to be extended to 31 March 2024 by Union Finance Minister Nirmala Sitharaman in the budget speech. This comes after the administration extended the deadline to March 31, 2022, in the previous budget. All home loans approved up until the end of March 2022 are included in the extension of home loans through the end of March 2024.
While a housing loan can assist you in purchasing a home for yourself, it can also prove to be a costly endeavor. However, the numerous tax advantages that come with such a loan enable you to make annual financial savings. Look at the best ways to utilize these advantages.
Who is eligible to claim a house loan tax benefit?
You must meet a fundamental criteria that is the same for all income tax sections in order to get the tax benefit on a house loan.
You must be the holder of both titles, that is, the owner of the real estate and the person taking out the loan to purchase it. You cannot obtain these advantages just by owning anything or by borrowing money. However, you might be a joint borrower or co-owner.
Therefore, if you are considering purchasing a home in your wife’s name and making the monthly payments from your salary, you would regrettably not receive any tax benefits.
In general, only a single person or a member of an undivided Hindu family may receive tax benefits on a home loan. No corporation, partnership, or other legal entity is eligible for the home loan interest and principal deduction.
Joint home loans on interest and principal amount payments are eligible for home loan tax benefits under Sections 24 and 80C.
When a home loan is obtained jointly, each borrower is qualified to deduct their principal and interest payments up to Rs. 1.5 lakh under Section 80C and up to Rs. 2 lakh under Section 24(b).
When compared to a single borrower’s house loan, this doubles the number of deductions that are available.
However, it is essential that both applicants are co-homeowners and have made all of their EMI payments.
Repayment of the principal amount for Section 80C home loan tax benefits
A maximum of Rs 1,50,000 in principal payments may be deducted from your taxable income each year. Both privately owned homes and rented units are covered by this. Stamp duty and registration fees are also included.
However, it can only be asserted once. To be claimed, property must be entirely built. If you sell your house within five years of possession, you are not eligible for this deduction. If you sell your house within five years of receiving ownership, any claimed deductions will be reversed in the year of the sale. Furthermore, this amount will be deducted from your income for the year the residence is sold.
Additional Home Loan Interest Deduction under Section 80 EEA for Affordable Housing
In the Union Budget 2019, Section 80 EEA was added to support the affordable housing market. First-time homebuyers are allowed to deduct up to Rs. 1.5 lakh in taxes from the interest they pay on loans for affordable homes under this provision.
The following requirements must be satisfied in order to claim the benefit:
● Take out a mortgage loan. Residential property’s stamp duty value shall not exceed Rs. 45 lakh.
● At the time the loan is approved, you should not be the owner of any residential real estate.
● As stated by Section 80EE of the Income Tax Act, you shouldn’t be qualified to make a deduction claim.
Benefit from a Joint Home Loan
Each borrower who takes up a combined mortgage with another person is entitled to a deduction of up to Rs. 2 lakhs on the interest paid. Tax can be deducted on the principle paid for sums up to Rs. 1.5 lakhs apiece. All applicants must also be co-owners of the property in order to be qualified for this deduction. As a result, you can receive extra tax advantages from a shared mortgage.
Tax Break For Second Mortgage
Under current law, tax benefits are available for paying interest. The full amount of the interest that was paid is yours to keep. It has been suggested that the second self-occupied property can also be classified as a self-occupied home to assist borrowers in saving more money on taxes.