Increasing real estate costs in India have led many to consider home loans to acquire a house. The Income Tax Act offers several deductions aimed at reducing the financial burden and providing savings.
With house prices in India skyrocketing, most homebuyers finance their purchases with mortgages. The Income Tax Act of 1961 provides deductions that ease the financial strain while also facilitating tax savings. Consider the following:
Repayment of principal amount (Section 80C): You are eligible to claim a maximum of ₹1.5 lakh each year for the principal repayment of your home loan, which includes costs such as stamp duty and registration fees.
Interest paid on housing loan (Section 24): This provision allows for a deduction of up to ₹2 lakh per year on the interest paid for home loans concerning self-occupied properties. Any interest payments that exceed the ₹2 lakh limit are not eligible for deduction.
Deduction on buying an affordable house (Section 80EEA): Individuals purchasing an affordable house may benefit from an additional deduction of ₹1.5 lakh on the interest paid, under Section 80EEA. This provision applies to homes sanctioned between April 1, 2019, and March 31, 2022, provided that the property’s stamp duty does not exceed ₹45 lakh.
Deduction under Section 80EE: First-time home buyers can claim up to ₹50,000 per year on the interest paid for loans approved between April 1, 2016, and March 31, 2017, for properties valued at a maximum of ₹50 lakh.
