How You Can Get Tax Benefits on Home Loan

We’ve all considered getting a Home Loan at some point. Investing in real estate is never a bad idea. Real estate has had a solid record of increasing in value over time. Besides, there are also various tax benefits on Home Loans that you can avail.

But, a mortgage isn’t the easiest loan to get. In fact, it can be one of the hardest. This is where you should consider different lenders, various schemes, and the rates of interest that are offered. 

But it comes as no surprise that there isn’t much clarity on how Home Loans work. How do you pick the best Home Loan lender, one that suits your personal financial status?

Here’s a quick guide that can help you understand the complexities of Home Loan and how you can get one that works for you.

Why Go for a Home Loan

The obvious reason you should go for a Home Loan is the financial cushion it provides. A property is a serious purchase, and a Home Loan will make it easier for you to make that purchase. 

With it, you don't have to compromise on your lifestyle and lose financial stability. Besides, a Home Loan application is now easier to apply to than ever before.

There are also some other tax benefits that you can get on your Home Loan.

So, tax benefits on Home Loan can be availed under the following sections. These are government warranted and can only be found with banks, NBFC, and other financial corporations. 

So, a regular taxpayer is eligible to get the following tax benefits under these sections.

Section 80C

This falls under the Income Tax Act. It entails that tax benefits can be availed depending on the principal amount of said Home Loan. There is an upper limit of Rs.1, 50,000 on this tax. 

This tax deduction takes place irrespective of the time and date of the payment. Even the total amount for stamp duty and the registration is allowed for deduction. This will be deducted even if the Home Loan isn’t taken.

Section 24

This section makes the borrower eligible for a tax benefit even on the interest that is paid for the Home Loan. There is an upper limit of Rs.2 Lakh for this deduction. It’s done in a different manner. 

The interest of various investments over a period of time summed and then deducted. You can claim this on a yearly basis even if no payments have been during that year.

There is a slight catch. If you have taken a repair, reconstruction, renewal loan, then you aren’t eligible for tax deductions on the interest of said loan. So it’s best to keep that in mind when you go for a Home Loan.

Section 80EE

This section offers borrowers a tax benefit on the interest they pay for a Home Loan if they’re first time buyers. It's difficult to get this deduction due to two reasons.

One is that the total value of the property being purchased shouldn’t exceed Rs.40 Lakh. The second is that the amount sanctioned cannot go beyond Rs.25 lakh. The upper limit of the deduction under this section is Rs.1 Lakh.

Keeping these things in mind should get you the best kind of tax benefits possible on Home Loan. If you prefer a Joint Home Loan, then ensure that you and your partner have good credit scores. That can help reduce the interest rate.