Millennials these days are on a Home Loan hunt striving to get the best offer with a better interest rate and a reasonable deal. But did you know there’s more to just interest rate and other charges?
What if we tell that there are several Tax benefits that you can take advantage of?
A person with a home loan gets Income Tax benefits under multiple sections like Section 80 EEA Section 24 and Section 80C.
These sections can provide benefits of up to Rs. 5 lakh.
Let us explain to you these Tax benefit sections:
Section 80 EEA
This also offers an Income Tax advantage for first time home buyers of up to Rs. 1.5 lakh.
The condition here is that the stamp duty value of the residential property should be up to Rs. 45 lakh only. And the tenure for the approval should be in the time frame of April 1, 2019 - March 31, 2022.
Tax exemption for the home buyer as per Section 24 would be an exemption of up to Rs. 2 lakh. This exemption would be under the home loan interest category.
The condition here is that a family member or even taxpayer himself must be residing in the property for which the loan is taken.
Income Tax benefit under Section 80C for the first time homebuyer is up to Rs. 1.5 lakh. This benefit can be claimed under the home loan stamp duty as well as home loan principal categories.
Under the condition that the person claiming tax benefits in this section, is bound to keep the property for at least five years from the date of possession.
Let us explain to you the above concept with an example, let’s say you want to buy a house for Rs. 40 lakh and Rs. 30 lakh you have taken as a Home loan considering the lender will only finance 80% loan for your house. You choose a loan tenure of 20 years with an 8% interest rate.
The EMI for such a loan would be Rs. 25,000 and the total amount paid in the first year would be around Rs. 3,00,000.
The claim of Rs. 90,000 can be taken under 80C, while the Rs. 50,000 (from the Rs. 90,000) can be taken for stamp duty payments, and is only valid for the first year
Under section 80EEA the individual can also claim the interest amount.
(Note: The above numbers are rough estimates of the amount; it may increase or decrease accordingly.)
All the above Tax benefits can only be availed if the Home Loan is taken from a Financial Institutions that are trusted, reliable and efficient to understand your Home Loan needs.
Pro Tip: Home Loan interest rates in the industry are at an all-time low and currently it is a good time to invest in the housing industry.