Buying a dream home requires a lot of investment which, for most can’t be met with only our savings. Banks and Non Banking Financial Companies (NBFCs) play a major role in helping us achieve this dream. Look for Fast and easy loans online. With increase in earning capacity, the tax payment too has increased. Let us see how taking a Home Loan Interest Payment can help us save Tax. You can search for Quick Loans Online.
If your income tax is high then it is a good idea to opt for home loans. Says Gaurav Gaur, CEO and Founder, mudrahome.com. Both the principal amount and the interest rate of home loans are eligible for tax rebate. Under Section 80C of the income tax act, tax benefit on costs such as registration, stamp duty and the principal amount paid by the borrower too are exempted.
One can claim deductions with regards to the interest that you pay on your home loan under Section 24 of the Income Tax Act. If you have a property for self occupation, you can claim an exemption of up to Rs.2 lakhs as long as the property is completed in 5 years.
If the loan is taken conjointly, then each of the loan holders can claim a deduction for home loan interest up to Rs 2 lakhs each and principal repayment under section 80C up to Rs 1.5 lakhs every year for individual tax returns.
Under Section 80C the payment for registration fee and stamp duty can also be claimed as a deduction from taxable income. The tax benefits of Home Loan under Section 80C are considered legitimate only if the construction of property is complete and the certificate been provided to you.
You can avail tax benefit on a second house as well, by claiming it as self-occupied. If you own two houses, you can claim one to be self-occupied, and the other will be considered as let-out or rented out property. You can deduct the interest on the home loan only from the notional rent.
If the home loan is in joint names, then you can save more tax as compared to when you have taken home loan individually.
If you and your wife are co-owners of the house as well as co-applicants of Home Loan, then you can claim tax rebate for it.
Each joint owner and borrower can claim Rs. 2 lakhs Tax rebate. For e.g. Gaurav can claim Rs 2 lakhs in his tax returns and his wife too can claim Rs 2 lakhs in her returns.
You can avail Tax deduction benefits on the top-up loan for the interest portion under section 24. Based on your income and repayment capacity a loan can be taken on an existing home loan from a bank, this is called Top-up loan. Most banks readily accept top-up loans for their existing customers.
You can claim deduction for both House Rent Allowance (HRA) and home loan interest subject to certain conditions. You cannot make a claim if you live in the house you have rented or any of your dependant family members live in it. The exemption for HRA can be claimed under section 10(13A) of Income Tax Act. The deduction for principal repayment of home loan and interest on it can be claimed under section 80C and 24B respectively.
Claiming tax benefits is a simple process.
Home Loan Prepayment is a good idea. Banks would usually levy a prepayment charge of about 2 – 3% of the outstanding loan amount, or if you are switching lenders, but it is still better than giving away a big chunk of money as interest for the complete tenure. Compare loans online before you do this.
Do not miss your monthly EMI payments.