BIntending to boost real estate investments, the Government of India provides various tax benefits to home buyers opting for housing loans. It puts the impetus on healthier home loan demand, most notably in the mid-income housing segment. Not only is it a convenient financing option to buy a dream home for them, but it also helps to save on taxes.
This article aims to give borrowers a clear understanding of home loan tax breaks in a simple way. First, let’s understand home loans.
What Exactly is a Home Loan?
Lending institutions provide home loans to individuals to buy a piece of land for home construction, constructed residences, house construction, or refurbishment of existing ones. Depending on the loan eligibility and funding norms of the lending institution, individuals can cover the cost of the home up to Rs.5 crores. These are long-term loans offered with flexible repayment tenure. The maximum loan tenure can go up to 30 years to own a home with small EMIs (Equated Monthly Instalments).
80EE and 80EEA – Tax Deductions on Housing Loans
However the qualification rules sound comparative for the two Areas, difference between 80EE and 80EEA and taxpayers’ eligibility to avail of these deductions:
- Tax deduction under Section 80EE
Buyer buying their first home can claim an additional deduction under Section 80EE , purchasing their first residential property can claim up to Rs.50,000 in a financial year until the repayment tenure ends. Individuals should know that this deduction is only available for housing loans until March 31 2017.
Home buyers need to meet these conditions to be eligible for this deduction:
- The home loan amount should be less than Rs.35 lakh.
- The upper cap for the property value is Rs.50 lakh.
- The Buyer should know that this deduction is only available for housing loans until March 31 2017.
- A housing finance company or lending institution should approve the home loan.
- The borrower must not have any other residential property on the date of loan sanction to avail of this deduction.
Tax deduction under Section 80 EEA
It is a deduction on home loan interest rates introduced in Budget 2019 to promote the housing sector. First-time home buyers can get the tax credit against this deduction. Individuals can claim an additional tax benefit of up to Rs. 1.5 lakh on home loan interest paid under Section 80 EEA. In addition to the tax benefit under Section 24(b) – a tax rebate of Rs 2 lakh is allowed. Therefore, borrowers eligible for tax deduction under section 80 EEA can claim a deduction of Rs 3.5 Lakhs on home loan interest paid.
The eligibility criteria to qualify for tax deduction under Section 80 EEA are as follows:
- The maximum stamp value for the house purchased should be 45 lakhs.
- The loan must have been approved between April 1, 2019, to March 31, 2022.
- Individuals must be first-time residential property buyers when the loan is approved.
- The borrower must not meet the eligibility criteria for the tax benefit under section 80EE. If an individual claims a deduction under section 80EE, they can not get a tax credit under section 80 EEA.
Thus, among the various benefits of a home loan is a tax advantage that helps home buyers to reduce the overall home loan cost. Check the eligibility and claim a tax deduction.
Home Loans with the Convenience of Online Application
In this digital world, borrowers expect the same frictionless and high-touch experiences with financial institutions as they experience in other fields. Apply online for home loan for the comfort of your place following simple steps:
- Fill in an online application following an easy self-explanatory process on the lender’s official website.
- Upload basic documents for the applicant’s identity authentication and property details that one wants to purchase.
- The lender’s representative will approach the loan seeker to explain the loan availability and other terms, including interest rates.
- The maximum loan tenure can go up to 30 years to own a home with small EMIs (Equated Monthly Instalments)
Individuals can use a home loan EMI calculator to check the interest amount paid in a year or the overall interest cost during the entire loan tenure. Taxpayers consider their home loan interest costs to be paid in a financial year and know their tax liabilities beforehand.
Make an informed home loan financing decision and save on loan costs by taking advantage of tax deductions.
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