{"id":7826,"date":"2018-02-15T12:53:33","date_gmt":"2018-02-15T07:23:33","guid":{"rendered":"http:\/\/apartmentadda.com\/blog\/?p=7826"},"modified":"2023-11-02T04:08:41","modified_gmt":"2023-11-02T04:08:41","slug":"do-home-loans-help-you-save-on-income-tax","status":"publish","type":"post","link":"https:\/\/adda.io\/blog\/2018\/02\/do-home-loans-help-you-save-on-income-tax\/","title":{"rendered":"Do Home Loans Help You Save On Income Tax?"},"content":{"rendered":"<p>Owning a home is a dream for many. An average Indian saves a better part of their income for the down payment of their dream home and then spend a good part of their remaining life paying off the loan.\u00a0<span style=\"font-weight: 400;\">For most Indians, buying a home is a huge financial decision and it often requires monetary support in the form of home loans. Which brings us to the question of the hour &#8211; Are housing loans going to help in any way other than with buying the house? The answer surprisingly is a yes.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e75e9cf07ab\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e75e9cf07ab\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/adda.io\/blog\/2018\/02\/do-home-loans-help-you-save-on-income-tax\/#Tax_Benefits_From_Home_Loan_For_Your_First_House\" >Tax Benefits From Home Loan For Your First House<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/adda.io\/blog\/2018\/02\/do-home-loans-help-you-save-on-income-tax\/#How_To_Claim_Tax_Benefits_On_Housing_Loan\" >How To Claim Tax Benefits On Housing Loan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/adda.io\/blog\/2018\/02\/do-home-loans-help-you-save-on-income-tax\/#Tax_Benefits_For_Joint_Homeowners\" >Tax Benefits For Joint Homeowners<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/adda.io\/blog\/2018\/02\/do-home-loans-help-you-save-on-income-tax\/#Can_Both_HRA_And_Deduction_Be_Claimed_On_Tax_Benefits\" >Can Both HRA And Deduction Be Claimed On Tax Benefits?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/adda.io\/blog\/2018\/02\/do-home-loans-help-you-save-on-income-tax\/#Summary_Of_Tax_Benefits_From_Housing_Loans\" >Summary Of Tax Benefits From Housing Loans<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/adda.io\/blog\/2018\/02\/do-home-loans-help-you-save-on-income-tax\/#Go_Get_Your_Dream_House\" >Go Get Your Dream House!<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Tax_Benefits_From_Home_Loan_For_Your_First_House\"><\/span><span style=\"font-weight: 400;\">Tax Benefits From Home Loan For Your First House<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Home loans on the first home you purchase in your name comes with many benefits. And no, it is not just exemptions you can claim while filing tax. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, for all of you considering getting a home loan to purchase that dream home of yours, here are some benefits of home loans which help you manage your cash flow better. As tax benefits are the title focus of this article, we\u2019re hoping that we\u2019ll be able to shed some light on how you get tax benefits when you obtain a home loan. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Section 80C says that when you purchase your first home, if the price of the house is less than INR 40 lakhs and the loan amount is no less than INR 25 lakhs, a deduction of upto 1.5 lakh can be claimed over the next two financial years, either spread out over these two years or in any one year. \u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As per amendments in the recent years, an owner can claim a deduction of upto 2 lakhs if they occupy the house for which the loan was taken out on.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, your deduction will be only INR 30K if any of the following is not true<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The loan was taken for construction or purchase of a brand new house<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Construction or purchase of said new home was completed within three years of the loan being sanctioned.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The loan was taken after April, 1999.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"How_To_Claim_Tax_Benefits_On_Housing_Loan\"><\/span><span style=\"font-weight: 400;\">How To Claim Tax Benefits On Housing Loan<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Claiming the deduction while the construction happens is not possible. In the time between the loan being issued and the construction being finished, the deduction can only be claimed on the interest you pay for the housing loan in five equal installments. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The deduction to claim principal repayment, an amount of upto INR 1.5 lakhs is available. You can verify your principal repayment amount with your bank or EMI history. However, keep in mind that you can claim the deduction only if the house is new or constructed from scratch and if it is not sold for the next 5 years after taking possession. <\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Tax_Benefits_For_Joint_Homeowners\"><\/span><span style=\"font-weight: 400;\">Tax Benefits For Joint Homeowners<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Joint homeowners too get tax benefits if they co-occupy the home for which the home loan was taken. Each homeowner can claim upto INR 2,00,000\/- each on deduction on interest. And upto INR 1,50,000\/- on principal repayment under Section 80C. <\/span><\/p>\n<p>Keep in mind that even if the loan was claimed jointly, you won\u2019t get to claim the benefits unless you are also co-owner of the property. Eg, if a loan was taken by a husband-wife duo and the house is only in the wife\u2019s name, the husband would not get any tax benefits at all. In simple terms, you have to be a co-owner and a co-borrower to enjoy tax benefits.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Can_Both_HRA_And_Deduction_Be_Claimed_On_Tax_Benefits\"><\/span><span style=\"font-weight: 400;\">Can Both HRA And Deduction Be Claimed On Tax Benefits?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If your employer supplies you with HRA component in your salary, then yes, you can enjoy both! This is all the more applicable if you have a home purchased on a loan and you stay in a different property that is rented out. HRA can be claimed for the rented property and deduction of upto 2,00,000\/- on the interest and not the principal repayment.<\/span><\/p>\n<p><a href=\"https:\/\/apartmentadda.com\/home\/contact_us_page_webinar.php\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-7824 size-large\" src=\"https:\/\/adda.io\/blog\/wp-content\/uploads\/2018\/02\/image1-2-e1518677536858-909x1024.png\" alt=\"income-tax-home-loan\" width=\"909\" height=\"1024\" \/><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Summary_Of_Tax_Benefits_From_Housing_Loans\"><\/span><span style=\"font-weight: 400;\">Summary Of Tax Benefits From Housing Loans<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">To put things in perspective and for easy understanding, here\u2019s a summary of all the benefits you can claim against your housing loan. <\/span><\/p>\n<p><b>1) Deduction on interest:<\/b><span style=\"font-weight: 400;\"> When you pay EMIs to finish off your loan, the interest component of the EMI will qualify as a valid deduction. Again, this applies if the loan and the property both have your name on it. I.e. you are both borrower and owner of the house.<\/span><\/p>\n<p><b>2) Deduction on principal repayment:<\/b><span style=\"font-weight: 400;\"> EMIs paid towards repaying principal can be claimed as deduction under Section 80C of the Income Tax Act. As mentioned before, only a maximum of INR 1.5 lakhs can be claimed.<\/span><\/p>\n<p><b>3) Stamp Duty And Registration:<\/b><span style=\"font-weight: 400;\"> In the year that stamp duty and registration was paid, they can be claimed as valid deductions under Section 80C. This can be claimed ONLY in the financial year that the payments were made.<\/span><\/p>\n<p><b>4) Pre-Construction Interest:<\/b><span style=\"font-weight: 400;\"> You can start claiming deduction on interest paid during pre-construction period starting with the year the construction began. To do this, you\u2019ll need to calculate the sum total of interest paid, divide that into 5 installments and claim them. As in, you claim them in 5 equal installments.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Go_Get_Your_Dream_House\"><\/span><span style=\"font-weight: 400;\">Go Get Your Dream House!<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">With so many benefits on housing loans, it is best that you avoid purchasing a house without a home loan. Yes, it could mean that the next several years of your life will be spent repaying it, but at least unlike renting, you\u2019ll still have an asset in your name by the end of the repayment.<\/span><\/p>\n<p>Owning a house is a dream for many! And with so many government policies in <a href=\"http:\/\/samolets.com\/poleznaya-informaciya\/\" target=\"_blank\" rel=\"noopener\">place to help<\/a> people achieve that, this seems like a good time to start looking for houses. The RERA act is expected to come into full force soon, so investing in real estate may be a good idea now. You can read <a href=\"https:\/\/adda.io\/blog\/2018\/01\/31\/rera-real-estate-regulation-development-act\/\" target=\"_blank\" rel=\"noopener noreferrer\">more about RERA<\/a> and its impact in India on our blog.<\/p>\n<p>Good luck, dear reader. We hope the next time you visit our <a href=\"https:\/\/adda.io\/blog\/\" target=\"_blank\" rel=\"noopener noreferrer\">blog<\/a>, it would be from your new home. Cheers!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Owning a home is a dream for many. An average Indian saves a better part of their income for the down payment of their dream home and then spend a&hellip;<\/p>\n","protected":false},"author":18,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[2026,2019],"tags":[57,980,1238,1239,1240,1241],"class_list":["post-7826","post","type-post","status-publish","format-standard","hentry","category-adda-for-community-residents","category-adda-india-housing-society-apartment-management","tag-adda","tag-apartment-buyers","tag-home-loans","tag-income-tax","tag-new-home","tag-tax-saving-on-home-loads"],"_links":{"self":[{"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/posts\/7826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/comments?post=7826"}],"version-history":[{"count":3,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/posts\/7826\/revisions"}],"predecessor-version":[{"id":11086,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/posts\/7826\/revisions\/11086"}],"wp:attachment":[{"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/media?parent=7826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/categories?post=7826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/adda.io\/blog\/wp-json\/wp\/v2\/tags?post=7826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}