Introduction
When it comes to buying a home, ownership is a significant commitment. It is essential to consider your financial situation and long-term goals carefully before making such a worthwhile investment. Research the housing market thoroughly. Openplot provides detailed information for getting guidance from a real estate professional.
Table of Contents
- Tax Benefits on Home Loans for FY 2024–25
- Who Can Claim Tax Benefits On The Home Loan?
- How Much Tax is Saved on Home Loan?
Home loans, however, make the landscape and the prospect of home ownership more attractive. From interest deductions to exemptions on property taxes, the world of tax benefits for home loan buyers is vast. Very beneficial in most cases. Exploring these benefits sheds light on the complex yet rewarding financial aspects of investing in one’s space.
Tax Benefits on Home Loans for FY 2024–25
It is essential to know the tax benefits when considering a housing loan. Tax benefits on HME loans are provided under Sections 24, 80C, and 80EE of the Income Tax Act, 1961. These benefits help reduce the overall cost of borrowing and make owning a home more affordable.
| Income Tax Act | Maximum Deductible Amount |
| Section 24 | Rs.2 lakh per annum |
| Section 80C | Rs.1.5 lakh per annum |
| Section 80EE | Rs.50,000 |
Who Can Claim Tax Benefits On The Home Loan?
- One crucial requirement common to all income tax sections must be fulfilled to claim tax benefits on home loans.
- If you are the bearer of both titles, i.e., the owner of the house property and the borrower of the property, you are claiming property tax for the homeowner. Only the owner of the funds or the borrower can avail of these benefits.
- If you plan to buy a house in your wife’s name and pay the EMI from your income, unfortunately, you will have no tax benefit.
- Only an individual or a member of a Hindu undivided family can claim tax benefits on a home loan. No company, partnership, or body corporation shall be allowed to benefit from home loan interest & principal deductions.
How Much Tax is Saved on Home Loan?
Sapos is taking a home loan of Rs. 50,000 at 15 percent per annum for the construction of your house on 1 June 2016, and the building will be completed by 1 January 2022. Then, the total interest tax deductible is pre-construction interest + post-construction interest.
Calculation of interest before construction:
- The pre-construction period is from 1 June 2016 to 31 March 2021 (31 March before the completion date).
- Interest for pre-construction period = (50,00015%10/12) + (50,00015%4) = Rs.36,250
- Amount of installment to be deducted in five equal installments = 36,250/5= Rs.7,250 per annum
Calculation of interest after construction:
- The post-construction period is from 1 April 2021 to the time of repayment of the home loan (even if the property is completed on 1 January 2022, the interest for the entire financial year is treated as post-construction interest)
- Interest amount per year after construction = 50,00015%1= Rs.7,500
Yearly Home Loan Interest Deduction 24
| 2020-21 | 2021-22 | 2022-23 | 2023-24 | 2024-25 | |
| Before constructionn Interest | 7,250 | 7,250 | 7,250 | 7,250 | 7,250 |
| After Construction Interest | 7,500 | 7,500 | 7,500 | 7,500 | 7,500 |
| Total Interest | 14,750 | 14,750 | 14,750 | 14,750 | 14,750 |
Conclusion
You can get some tax benefits if you take a home loan while buying a house. This also applies to those who are subject to the rules and regulations of home loans. It is essential to understand the potential benefits and implications fully. Being aware of tax law or regulation changes can help you take advantage of the benefits available.
Also read: A Homeowner’s Guide to Understanding Property Taxes