Buying a dream home is a big deal so when you achieve this lifetime goal in the city of your dreams, it is time to celebrate. But before you take the big leap and venture out in search of the exact home loan procedure, let’s understand whether you can claim any tax benefits on the home loan you borrow.
The Indian Government encourages citizens to invest in real estate and purchasing houses. Therefore, a home loan is eligible for tax deduction under Section 80C. There are various tax benefits that you can claim in different scenarios of investing in a house.
Deduction for interest paid on housing loan: If you are paying EMI for the housing loan, it has two components: interest payment & principal repayment.
Deduction on principal repayment: The principal portion of the EMI paid for the year is allowed as a deduction under section 80C. The maximum amount that can be claimed is Rs. 1.5 lakh.
Deduction for stamp duty & registration charges: Besides claiming the benefit on principal repayment, a deduction for stamp duty and registration charges can also be claimed under section 80C but within the overall limit of Rs. 1.5 lakh.
Deduction for a joint home loan: If the loan is taken jointly, each loan holder can claim a deduction for home loan interest up to Rs. 2 lakhs each and under section 80C up to Rs. 1.5 lakh each in their tax returns.
There are plenty of other benefits that the Government offers to those looking for tax deductions on home loans. It is always suggested to do your research before taking the home loan.