Home loans: A guide to claiming tax benefits

1. Housing Loan

2. Home loans: A guide to claiming tax benefits

3. To alleviate the burden of a home loan, the government offers several tax concessions to borrowers. • While most people may be broadly aware of home loan tax benefits, there are several other nuances that need to be highlighted. • Principal repaid on home loan The principal amount repaid on the home loan taken can be deducted from your income up to Rs 1.5 lakhs under Section 80C. • This deduction, however, comes with a couple of caveats. You can only avail of this deduction after construction of your house is complete and possession is received, and not while construction is underway.

4. Secondly, speculators should know that you can’t avail of this deduction on principal repayment, if you sell the house within five years of taking possession. • If you do, you will have to reverse the deduction. This means that all the deduction you have availed of so far, will be treated as income in the year of sale and taxed entirely. • Interest repaid Tax saving is also available on interest repaid on a housing loan in India. • However, the deduction is different for a self-occupied property than for a house that you intend to rent out.

5. There is a catch here which to some may appear illogical. Even if the second house remains vacant, it will be treated as being on rent. • You will have to show a notional rental income from it based on market rates, which will be taxable after factoring in the two deductions mentioned above. • Deduction on home loan insurance: If you bought a home loan insurance cover (a single-premium policy) along with the loan, you can avail of deduction on the premium paid under Section 80C. • [Source: https://housing.com/news/home-loans-guide-claiming-tax-benefits/]

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