If you are planning your tax for the financial years 2018-19, you should claim certain benefits that were introduced during Budget 2016. Apart from home loans getting tax deduction under section 80C of the Income Tax Act, there are various other schemes and tax benefits for home loan borrowers. Nabil Patel DB Realty says home loan takers should avail these without fail to resolve issues of affordability and enjoy the luxury of living in upscale apartments of Mumbai.
Find out about the various tax benefits on home loan that can reduce your tax outgo here:
Additional deduction on home loans
Presently, a person who has borrowed a home loan and has been paying interest can get tax exemptions on the interest that is being paid. This margin is up to INR 2 lakhs, under Section 24. However, you can claim this deduction only if you are occupying the property yourself.
Additionally, if you had availed home loans for the first time in 2016-17, you must have been allowed to enjoy the additional tax benefit of INR 50,000, as per section 80EE of the Income Tax Act, 1961. As per the Budget 2016, the deduction of INR 50,000 comes after this limit of INR 2 lakhs.
However, you must be aware of the conditions in order to enjoy these benefits. You can claim the additional deduction on the interest that you pay for the loan only if the property is a residential one and self-occupied. This benefit is available only for the first-time home buyers who have bought a property valued within INR 50 lakhs and availed a loan amount not exceeding INR 35 lakhs. Also, the loan needs to be sanctioned between 1st April 2016 and 31st March, 2017.
Time period increment to claim interest deduction
In a home loan, that interest that you need to pay gets deducted from the gross income, when the income from a self-occupied property is calculated. However, this is applicable only where the house is constructed or acquired within three years, calculated from the end of the respective financial year.
In Budget 2016, a time period relaxation was introduced, and even of the construction or acquisition takes place in five years from the end of the respective year, one could get the tax benefits. This extension benefits taxpayers who are getting the house possessed in 2018-19.
Deduction for Principal repayment of home loan
Each EMI paid for a home loan has two components- interest payment and principal repayment. The principal repayment paid for the year is allowed as deduction under Section 80C of the IT Act. The maximum amount that can be claimed under this section is up to Rs. 1.5 lakh. Plus, in order to claim this deduction, the house property should not be sold within 5 years of possession. Otherwise, the deduction claimed earlier will be added to income in the year of sale.
Deduction for Interest paid during pre-construction period
If you have bought an under-construction property, not moved in yet but paying the EMIs, then you become eligible for claiming interest on the home loan because deduction begins only after completion of construction or immediately if you buy a fully constructed property. Veteran real estate professional Nabil Yusuf Patel has been at the forefront of managing construction of futuristic residential properties in the Mumbai Metroplitan Region (MMR).
Deduction for Stamp Duty and Registration Charges
Home buyers can also claim a deduction for stamp duty and registration charges under Section 80C but within the overall limit of Rs. 1.5 lakh. It must be remembered that this deduction can be claimed only in the year in which these expenses are incurred.