Keywords: ITR filing, Income tax exemption, deduction, home loan borrowers
Home loan borrowers should be aware of the income tax exemption and deduction that they can get while filing their annual ITR. This article discusses some of the important aspects of these exemptions and deductions that every home loan borrower should know.
1. Interest on Home Loan: The interest paid on your home loan is eligible for tax deduction under section 24 of the Income Tax Act. The maximum limit for this deduction is Rs. 2,00,000 for a self-occupied property. If you have rented out your property, there is no limit on the amount of deduction.
2. Principal Repayment: The amount of principal repaid on your home loan is eligible for tax exemption under section 80C of the Income Tax Act. The maximum limit for this deduction is Rs. 1,50,000. It is important to note that if you sell your property within five years of taking possession, the deductions claimed earlier would be added back to your income in the year of sale.
3. Joint Home Loan and Co-borrower: If you have taken a joint home loan with your spouse or any other family member, then both of you can claim a tax deduction separately for the interest paid on the home loan. However, the principal repayment deduction can only be claimed by the person who has made the payment.
4. Pre-EMI Interest: If you have taken a loan for the construction of a new house, then the interest paid during the pre-construction period can be claimed as a deduction in five equal instalments starting from the year of completion of the construction.
5. Stamp Duty and Registration Charges: The stamp duty and registration charges paid at the time of purchase of a property are eligible for tax deduction under section 80C.
6. Tax Benefits for First-time Homebuyers: First-time homebuyers can claim an additional deduction of Rs. 50,000 under section 80EEA for the interest paid on their home loan. This deduction is applicable only if the value of the property is up to Rs. 45 lakh and the loan was taken between 1st April 2019 and 31st March 2021.
7. Tax Benefits on Second Home: If you own two or more properties including a self-occupied property, then only one property can be considered as self-occupied and the other properties would be deemed to be rented out. The interest paid on the home loan for the rented-out property can be claimed as a deduction from the rental income earned on that property. The entire interest amount can be claimed as a deduction with no upper limit.
8. Tax Benefits for Let-out Property: If you have let out your property to tenants, then you can claim tax exemption on the entire interest paid on the home loan for that property. You can also claim a standard deduction of 30% on the rental income earned from that property for repairs, maintenance, and other expenses.
In conclusion, home loan borrowers should be aware of the tax exemptions and deductions that they are eligible for while filing their ITR. It is important to keep the necessary documents and receipts to claim these exemptions and deductions. By doing so, home loan borrowers can reduce their tax liability and save money while fulfilling their dream of owning a house.