InvestorQ : What are the tax benefits I can avail of when taking a home loan?
Kunal Verma made post

What are the tax benefits I can avail of when taking a home loan?

Samita Patil answered.
3 years ago

Other than the feeling of fulfilment, buying a house on a home loan can also help you lower your tax outgo.

The tax benefit on home loan is divided into two sections-

1. Tax exemption on the repayment of the home loan principal amount

Under Tax Section 80C you can deduct your taxable income by Rs. 1,50,000

2. Tax benefit on the interest for your home loan

Under Section 24 of the Income Tax Act, you can avail a tax benefit on the amount of interest paid on you home loan up to Rs. 2,00,000 maximum for a self-occupied property.

Other than the above benefits, joint applicants or joint borrowers too get significant tax benefits.

- For a self-occupied property: A co-owner, who is also a co-applicant in the joint loan, can claim a maximum deduction of Rs. 2,00,000 for interest on the home loan in their income tax return (ITR). The total interest paid on the loan is allocated to the owners in the ratio of their ownership.

- For a rented property: The interest that can be claimed as a deduction in case of rented property is restricted to the amount to which loss from such house property does not exceed Rs. 2,00,000 lakh.

Hence, if a married couple co-signs for a home loan, they can claim a total tax exemption of Rs. 7 lakh on their home loan.