How to use home loans effectively for tax benefits

• Under section 24, annual interest up to Rs 2 lakh can be claimed as a deduction against income. Senior citizens will get up to Rs 3 lakh.
• Depending upon your tax slab, the tax liability can be reduced up to Rs 67, 980
• As per section 80 EE, the homebuyers will get the tax benefit for home loans 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.
• Tax benefit will be available for the purchase of land, construction, repair, and renewal of home property
• As per section 80C, the applicant will get a maximum tax benefit of Rs. 1.50 lakh for principal repayment.
• Under section 24, you are eligible to claim tax deduction if you take a loan from friends, employer, relatives or any private lender to buy a home. A valid certificate from the lender (relatives/friends/ employer) should be produced showing the detail amount of loan taken.

 
Claim tax benefit on for under-construction property before possession

• Section 24 of IT Act clearly states that payment of interest is qualified for tax reduction for under construction (on-going) property.
• The total interest paid during the construction period can be claimed in 5 equal installments starting from the financial year in which the construction is completed.
• Tax benefit during construction is not allowed for repair or renewal of an existing home.

Avail tax deduction for rented property

• According to section 24, you are entitled to a tax deduction if the property is not self-occupied and you are away for various reasons such as employment, business needs.

Joint home loan tax benefits for co-owners/co-borrowers

• For the co-owners of the property, the home loan borrowers (any number of applicants) can claim individual tax benefit.
• As per section 80C, each applicant will get a maximum tax benefit of Rs. 1.50 lakh for principal repayment.
• Under section 24, the applicants can claim Rs 2 lakh for interest repayment.
• Even if you are paying the EMI of the property owned by your parents/ spouse, you are eligible for the tax deduction.
• The information compiled taken from various authentic sources.