How to get an annual home loan tax benefit of Rs 5 lakh

A home loan is an offer that many rely on to take this crucial first step in becoming homeowners. This provision is a smart option because it usually gives you a large loan amount for a long term at a profitable interest rate. You can thus facilitate a major purchase while respecting your budget. In addition, you have access to an annual tax benefit for home loans which includes deductions on interest repayments, principal repayments, and more.

Considering the amount of money you can save by paying off your , it is important to know more about these tax benefits. This way you know exactly how much you are entitled to and if there are any special tax provisions that apply to your profile. In fact, knowing this information is essential for effectively using digital tools like the Home Loan Tax Advantage Calculator.

To help keep you well informed, here are the tax advantages of a home loan you should know.

Deduction under section 80C for stamp duty and registration fees

In addition to return of capital cash for your deductions, under section 80C, you can also claim payment of stamp duty and registration fees. These must be claimed in the year they are incurred and will be subject to the overall limit of Rs.1.5 lakh that Section 80C offers you. You cannot claim them more than once and after the year has passed.

Deduction under article 80C for the repayment of capital

Under Section 80 of the Computer Law of 1961, you can claim a deduction of up to Rs.1.5 lakh each year for your mortgage principal repayment. This applies to both freestanding properties as well as rented properties, but having completed construction is essential in order to receive the tax benefit of the home loan.

Also, to claim the deduction, you are not allowed to sell your property for at least 5 years after owning it. If you sell it, any deductions you claimed up to the year of sale will be canceled and added to your income for the year of sale.

Under Section 80C of the Information Technology Act, you can claim tax benefits on mortgage interest repayment for independent and leased properties. In the case of independent ownership, you are entitled to a deduction of up to Rs. 2 lakh each year. For a rented property there is no limit to what you can claim as interest, but Rs.2 lakh is the aggregate loss you can claim against title to the home.

Note that the deduction of Rs. 2 lakh is only applicable if the property is purchased or built within 5 years, from the end of the year in which the mortgage was used. If construction is still in progress, the maximum limit you can claim is Rs 30,000. For rental properties that are still under construction, there is no limit and you can deduct any amount paid as interest.

Deduction under sections 80EE and 80EEA for new owners

As mentioned earlier, you may be offered special loan arrangements when you pay off your home loan. New owners can get an additional deduction of up to Rs 50,000 through Section 80EE and up to Rs 1,50,000 through Section 80EEA on interest repaid each year. This brings the total amount of the deduction to Rs.4-5 lakh. If you are claiming deductions under Section 80EE, you will not be able to benefit from Section 80EEA.

A home loan offers immense opportunities for tax savings. Being able to get a deduction of up to Rs.3.5 lakh per year, or more if you are a first-time homeowner, is incredibly beneficial. You can even multiply your by borrowing jointly with a co-applicant. However, you also need to supplement your tax savings with an optimal loan. A good way to do this is to take out a home loan from Bajaj Housing Finance Limited.

Thanks to this, you have access to a penalty of up to Rs.3.5 crore to buy or build the house of your dreams. This sanction is available at an attractive mortgage interest rate and for a flexible term of up to 30 years. You can thus adapt the reimbursement to your income and keep your expenses manageable. This offer is also easy to use as you only need to meet simple loan criteria and submit minimal documentation to start loan processing. For quick access to these features and to get the tax benefits that come with them, apply online today!

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Posted on: Wednesday February 10, 2021 5:32 PM IST