Tax Benefits of Home Loan 💰 | Home Loan Tax Benefits - CA Sonia

Home Loan Tax Benefit is the most searched topic on google but the accurate answer is here. One of the most #controversial topics has been plugged by #government in Budget 2023: Double deduction of interest on loans for house property.

Currently, we are having three sections for claiming a deduction of interest on borrowed capital for #house properties:

a. Interest deduction u/s 24 from income on house property
b. Interest forming part of acquisition cost for deduction as COA while computing #capitalgain 
c. Interest deduction under chapter VIA.

Therefore, it was observed that some assessees have been claiming double deductions of interest paid on espoused capital for acquiring, renewing, or reconstructing a property.   

  • In Begin with, it's claimed in the form of a deduction from income from house property under section 24, and chapter VIA on fulfillment of conditions. 
  • Secondly while computing capital gains on the transfer of such property, this same interest also forms a part of the cost of acquisition or cost of the improvement.

In order to prevent this double deduction, it is proposed to provide that the cost of acquisition or the cost of improvement shall not include the amount of interest claimed under section 24 or Chapter VIA.

In nutshell…wef A.Y. 2024-25, If you are claiming #interest deduction under section 24 or chapter VIA, the same will not be allowed as a deduction while computing capital gain on the sale of that property.

tax benefits of home loan

Youtube Video Link -

Income Tax Benefit on House Loan

The government offers various mortgage tax incentives under the Income Tax Act 1961. Section 8 describes various ways to obtain mortgage tax benefits. Read below for more information.

Many programs like Pradhan Mantri Jan Dhan Yojana are giving the Indian housing sector the green light by striving to eliminate affordability and accessibility issues. This article discusses the tax benefits of a home loan.

Interest paid on housing loan - Deductions

To buy/build a house, you have to take out a mortgage. If borrowed to provide housing instructions, must be completed within five years of the end of the fiscal year in which the loan was taken.

In the case of paying EMI on the mortgage loan, it consists of two components – 
  • Interest payment 
  • Principal repayment 

The interest portion of EMI paid in a year up to Rs. can be deducted from Section 24 and. There is no cap on interest charges on rental properties. 

However, the total amount of damages that can be claimed under the heading of 'ownership of house' is limited to only Rs.200,000. This deduction can be claimed from the year the housing is completed.

Principal repayment 

A major portion of the EMI paid in that year is allowed as a deduction under Section 80C. The maximum amount you can charge is Rs 1.5 lakh. 

However, in order to claim this deduction, you must not sell your home within five years of owning it. Otherwise, previously claimed deductions will be added to the year of sale.

Stamp duty and registration charges

In addition to claiming capital gains deduction, the deduction for Section 80C stamp duty and registration fee can also be claimed, but the total amount is not more than INR 1.5 lakh. 

However, you can claim only in the year in which these costs are incurred.

Section 80EE Deductions

An additional Section 80EE deduction is granted to home buyers up to a maximum of Rs 50,000. To qualify for this deduction, the following conditions must be met: 

  • The amount of credits borrowed must not exceed Rs. 35,000 and the value of the property must not exceed Rs. 50,000.The loan
  • Loan must be approved between 1st April 2016 and 31st March 2017. 
  • And the person has no other house on the day the loan is granted. H. First-time homeowner. 

Section 80EE has been reinstated, but only applies to loans approved by March 31, 2017.

How to Calculate Tax Benefits on Home Loan?

The easiest way to determine your mortgage tax benefits is to use an online calculator. Enter your mortgage details and select Calculate to see a detailed table. The information you often need is: 

  • Loan Amount
  • Tenure
  • Interest Rate
  • Loan Start Date
  • Gross Annual Income
  • Existing Deduction Under 80C/D (1)

Post a Comment