A very important criterion to be kept in mind while taking a home loan is the Tax Benefit on Home Loan. In the union budget announced on 1st Feb 2017, the Finance Minister has made significant changes with respect to tax benefit on home loan.
So, here we will discuss about these changes and further tax benefits on home loan.
Some points we will discuss here—
- Tax benefit on home loan for under construction property before possession
- Tax benefit on home loan for individual applicant
- Tax benefit on home loan for co-applicant, co-borrower and joint owner
- Tax benefit on home loan for second home
Tax benefit on home loan for under construction property before possession
Booking an apartment which is under constructed is sometimes cheaper.
If you have taken a home loan for purchasing under construction property, you can claim tax deduction on the interest paid during the construction year after construction is completed and property possession is given to you but there is no tax deduction on principal repaid during the construction period.
According to Section 24 of IT Act, you can claim deduction against the interest amount that you have paid on your housing property during the pre-construction period.
Tax benefit on home loan for individual applicant
EMI is typically divided into principal and Property Loan Emi Calculator.
Principal is allowed as deduction from your gross total income (subject to an overall cap of 1.5 lakh with other eligible investments).Interest payable on self-occupied property is subject to a maximum deduction of 2 lakh under the head ‘income from house property’.
It can be set off against other income, in the same year. This reduces your tax liability. But to claim this, it is essential that the acquisition or construction is completed within 5 years from the end of the financial year in which the loan was taken; else the deduction will be limited to 30,000.