Are you a First time home buyer? Here is some good news from Income Tax. Under several sections of the Income Tax Act, tax deductions on the interest and principal components of a home loan are available, and the total tax deduction that may be claimed on a home loan amounts up to ₹5 lakh.
Deduction on interest
Under Section 24 of the tax code permits a deduction of up to ₹2 lakh for interest paid on a house loan for a self-occupied property, while full interest is deductible for a let-out property. Only after the house is finished can you claim this deduction. If there was any interest paid during the construction period, it can be collected in five installments Once the project is completed.
Deduction on principal
As per the, A borrower can claim a deduction on the principal repayment of a home loan under Section 80C's overall tax deduction ceiling of 1.5 lakh. The loan must be taken from a financial entity regulated by RBI or from your employer, which can be the federal or state government, a public or public-sector company, a university, or a cooperative society. Furthermore, this deduction is not accessible until the house is under construction, and the rebate claimed will be added to your income and taxed if you sell the property within 5 years.
Over and above, Section 80EEA of the income tax act allows an extra deduction of up to 1.5 lakh on the interest component over and beyond section 24. This provision for affordable housing was included in the Union Budget 2019 and comes with a slew of conditions.
"The loan should have been sanctioned by a bank, banking company, or housing finance company between 1 April 2019 and 31 March 2022," The stamp duty value of the property should not exceed 45 lakh, and the home buyer should not own any residential house property on the date of loan sanction."
The finance bill makes no mention of whether or not a home loan taken on an under-construction property qualifies for a deduction under section 80EEA. "Whenever the law expressly prohibits a condition, such as in Section 24 and Section 80C, it is specifically stated in the relevant section. As a result, if the property is under development, and 80EE deduction can be claimed."
If you are looking to buy a new home reach out to us with your property requirements and we will provide you with the best available options.
Comments