First-Time Home Buyers, Avail Lucrative Tax Benefits When You Purchase Your First Home
One of the greatest advantages that a first-time homebuyer has is in terms of the lucrative tax benefits available. In the recent years, the government has taken several initiatives to promote affordable housing and make it easier for prospective buyers to sign up for home loans. These measures, along with major economic and regulatory reforms like RERA and GST, have given the housing market in India a big boost.
A good home loan works in an easy and efficient manner to help you own the home of your dreams. And while there are many ways to go about finding a home loan that works best for you, it is important to be aware of the several tax concessions that you can avail of while repaying the home loan.
There are three sections of the Income Tax Act under which the taxpayer can avail of benefits on a home loan.
• Section 80C
• Section 24
· When you are a first-time homebuyer:
Under Section 80EE, you can claim special tax benefits if you are a first-time homebuyer and if the property has been purchased for residential purposes. The government gives a tax benefit of Rs 2.4 lakh to first-time homebuyers with taxable income below Rs 18 lakh per annum. This has served as a game charger for the housing sector in India.
. Home loan repayment with EMI plan:
You can claim tax benefits on both the principal amount repaid as well as on the interest amount, under Section 80C and Section 24 respectively. Stamp duty charges, registration charges and the processing fees of the home loan are also eligible for tax deductions.
. When the home is self-occupied, or jointly owned:
When the property is self-occupied, the interest paid on loan is eligible for deduction up to Rs. 2 lakh under Section 24. The principal amount repayment of up to Rs. 1, 50,000 is eligible for deduction under Section 80C. When the home is jointly owned, you and the co-owner can claim separate tax deductions in your respective ITR.
· When the property has been leased out:
In this case, the principal amount repaid remains unaffected, but the interest amount paid can be completely claimed as tax deduction. Property that has been let-out can claim the deduction—without any limit– for any loan taken for the purpose of repairs, renewal and reconstruction.