Almost everyone applies for home loan at some point in his life. But hey, do you know that home loan can also help you avail tax benefits. Read on to know about 6 smashing home loan tax benefits you never thought existed.

Tax Deduction on the Interest of Home Loan

Section 24 of the income tax act allows the applicant to claim tax deduction up to Rs 2 lakhs per annum on the interest of the housing loan. However, what must be understood here is the fact that if the property is put on rent there would be no cap on the tax benefit on the interest paid during the financial year.

Benefit During Pre-Construction Period

One has to repay his EMI for an under-construction property as well. However, the legal guidelines stipulate that in such cases interest payment should be deducted from the income in five instalments which would start from the completion of the construction or when the property is handed over.

Benefit on Principal Repayment

Section 80C of the income tax act offers benefits on the principal payment. The maximum deduction that can be availed during a financial year is capped at INR 1.5 lakh. However, it is important that the property remains with the original buyer and is not sold in the first 5 years otherwise all the deductions claimed would be added to the applicant’s income and taxed at the current rate.

Benefit on Stamp Duty and Registration Charges

Section 80C of the income tax act also offers tax deduction on the stamp duty and registration charges. However, such deductions must stick to the overall limit of INR 1.5 lakh per annum. It should however not be forgotten that tax rebate on stamp duty and registration charges can be availed only in the financial year when one incur these expenses.

Benefits for First-Time Home Buyers

Section 80EE of the Income Tax Act allows an additional deduction of INR 50,000 if you are a first-time homebuyer. However, for that, the value of the house must be less than Rs 50 lakhs. The loan amount to purchase the house, on the other hand, should not exceed 35 lakhs. It is also important for the applicant to not own any other property when the loan is sanctioned.

Benefits for Joint Applicants

Section 80C and Section 24 offer tax deduction for principal repayment and interest for joint applicants. However, the upper limit of Rs 2 lakh for interest payment and Rs 1.5 lakh for principal repayment has to be maintained. The joint applicants also have to be the co-owners of the property to claim the tax benefits.

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