How to avail maximum tax benefit of a home loan?

Everyone has a desire to one day be able to purchase their very own home. The government has provided first-time purchasers with several incentives to make buying a home affordable for the most significant number of individuals. Because of this, a home loan qualifies for a tax deduction under Section 80C of the Income Tax Act of 1961. Additionally, tax benefits on home loans dramatically reduce the amount of tax you have to pay.

Deduction for Principal Amount Paid Back on Any Repayments

You should, at this point, have a good understanding of the two components of EMI, namely the principal amount and the interest amount. You are eligible for a tax exemption on your home loan on the amount you repaid if the property is used for your occupancy, as stated in section 80C of the Income Tax Act of 1961. If you purchase a second property with the assistance of a home loan and either occupy it yourself or rent it out, you are still eligible to receive a housing loan tax benefit of up to Rs. 1.5 lakh. Even stamp duty and registration costs may qualify for tax breaks, but only on the condition that you do it only once.

Subtraction from the Total Amount Paid for Interest

You can take advantage of the housing loan interest deduction provided in section 24 of the Income Tax Act. You can receive a tax break on your house loan interest payments of up to Rs. 2 lakh if the property is used for occupancy. If you own another real estate, the tax deductions you can claim for both residences should not exceed Rs 2 lakh.

Interest Rate Reductions are Available for Mortgages Taken Out During the Pre-Construction Phase

Following section 24b, you can claim a home loan tax benefit for the interest you paid on your home loan during the pre-construction phase. You would be eligible for a deduction on these interest amounts if you applied for a house loan when the building of your property was still in progress and had produced interest rates throughout this phase. The deduction would be broken down into five equal installments.

Deduction Applicable to a Joint Mortgage

If you and your partner have filed for house loans together, you can each enjoy tax deduction benefits on the principal amount of up to Rs. 1.5 lakh (section 80C), and you can each enjoy tax deduction benefits on the interest amount up to Rs. 2 lakh (section 80E).

Conclusion

When it comes to the repayment of the cost of a home loan, income tax rebates on a home loan can result in a significant amount of savings for prospective home purchasers and lighten the burden they face in this regard. As part of the Union Budget for 2019, the government has made further financial incentives available to those who purchase real estate. Nevertheless, even from an investment perspective, buying a brand-new house seems like it would be a wise decision to make.