Tax advantages of a home loan | with Income tax Preparation Software All in One in Excel for the Non-Government Employees for the F.Y.2023-24 and A.Y.2024-25

The Income Tax Act of 1961 offers a number of home loan tax deductions and encourages

residents to invest in real estate. Home loan borrowers should be aware of all available home loan

tax deductions because doing so can allow you to significantly reduce your tax liability.

These are the tax benefits or income tax deductions on home loans that every home loan borrower should be aware of.

Discount when paying the principal of the home loan

The EMI you pay consists of two parts: the principal repayment and the interest paid. The principal component of EMI is deductible under Section 80C of the Income Tax Act of 1961 for self-occupied property. Section 80C deductions can also be claimed for stamp duty and filing fees paid when you purchased a home.

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Discount on interest paid on a mortgage loan

The taxpayer can deduct both the interest paid on a mortgage loan and the principal amount paid on the loan. For the case of a self-occupied property, section 24(b) allows the deduction of interest paid on the mortgage loan up to a maximum of Rs 2 lakhs in any given financial year.

If you own two houses and one of them is vacant or occupied by your parents, Section 24 also covers interest on any loans to buy another house. The total tax deduction for home loans for two houses cannot exceed Rs. 2 lakhs in the fiscal year.

Additional discount on the purchase of an affordable home

An additional discount on the interest paid on the mortgage loan used to purchase the home is available if you purchase it in the affordable housing category. Rs 1.5 lakh may deduct under section 80EEA in the financial year. A maximum of Rs 2 lakh plus deduction is allowed under section 24. Thus, a taxpayer can claim up to Rs 3.5 lakh deduction in a tax year in case of buying a reasonable house.

Please note that you cannot claim the same amount twice in two different tranches like as claim U/s 24 B and 80EEA

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Deduction under Section 80EE

For the 1st-time home purchases taking out mortgage loans, this deduction was reinstated in the 2016-17 tax year. Taxpayers who got a home loan in the 2016-2017 tax year he is eligible to claim an extra tax deduction U/s 80EE of up to Rupees Fifty Thousand. Recently, under section 24(B), a home loan borrower who paid interest on the loan can deduct that interest from his total annual income up to a maximum of Rs 2 lakh.

To be eligible for this discount, you must meet the following requirements:

a) Only residential properties will be eligible for the increased loan interest deduction.

It is only available to first-time homebuyers.

c) The annual maximum fringe benefit is limited to Rs. 50,000.

d) The value of the house cannot exceed Rs. 50 lakh when applying for a loan.

e) The loan cannot be for more than Rs 35,000.

f) The home loan may be sanctioned between April 1, 2016, and March 31, 2017.

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If you already obtained a home loan in the 2016-2017 tax year, you can still claim this discount until the loan is paid off in full. This tax benefit is not available for new home loans obtained after April 1, 2017.

How do I claim tax benefits under Section 80EEA?

To qualify for benefits under Section 80EEA, a person must meet a number of requirements. These requirements are the following:

a) The home loan entitled from 1st April 2019, and 31 March 2022;

b) Stamp duty on house property cannot exceed Rs. 45 deficiencies;

c) a taxpayer may not own any residential property as of the date the loan is sanctioned, and d) an individual taxpayer may not be eligible for a deduction under current Section 80EE of the Act.

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