Eligible for a tax deduction on repayment
Both the principal amount and the interest amount of Equated Monthly Instalment (EMI) are qualified for tax deduction under two separate sections of IT Act of 1961.
Even if you failed to pay few EMIs during a financial year, you are eligible to claim the tax deduction for the interest of EMI. Section 24 of IT Act clearly states that payment of interest is qualified for tax reduction.
Section 80 C mentions that the principal repayment can be claimed under deduction.
Tax benefit for joint home loan
Home loan borrowers can claim individual tax benefits, provided they are the co-owners of the property. Even if you are paying the EMI of the property owned by your parents/ spouse, you are not eligible for the tax deduction.
Claim tax benefit on interest paid during pre-construction period
You are eligible for tax benefit on the interest repayment of home loans once the property has acquired the completion certificate. Any interest paid during the construction period can be claimed in 5 equal installments starting from the financial year in which the construction is completed.
Processing fee and other statuary charges are tax-deductible
The processing fees and other statuary charges are considered as the interest and as a result, these charges are applicable for a tax deduction. According to section 80 C(2) (xviii)(d), any payment of stamp duty and registration fees are tax-deductible.
Reinstatement of Section 80EE
Section 80 EE is reintroduced with effect from April 1, 2017. The first time home buyers will get the tax benefit for home loan up to Rs 50,000 per financial year. The value of the property should not exceed Rs 50 lakh and the amount taken for the loan should be less than Rs 35 lakh. The home loan has been sanctioned between April 2016 to March 2017.
Tax deduction for loan amount taken from Friends /relatives/employer
Loan taken from an employer, friends, relatives or private lender to buy a house is eligible to claim tax deduction for the interest under section 24. The borrower needs to obtain a certificate from the lender (relative/friend/employer) which shows the detail about the amount of loan taken and payable interest etc.