Home Loan Borrowers are provided few of the tax incentives as either tax break or exemption for serving such a large ticket-size loan. After the Union Budget announcement on February 1, 2017, few of the changes were effected, knowing which come in handy for them at the time of making a claim while filing the tax return.

1. Maximum deduction on interest for a home loan set at Rs. 2 lakh from FY 2017-18

Barring taxpayers who deal in real estate, all taxpayers will have a maximum exemption of Rs. 2 lakh for the interest paid on capital borrowed to purchase a home or for any other investment. The earlier provisions allowed such interest paid to be set off against the rental income without any prescribed limit.

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2. An exemption can be claimed even when the EMI is missed in a year:

 As long as the interest is payable on the housing loan, the taxpayer is allowed a tax advantage in lieu of it as a deduction. The said deduction is allowable also in a condition when the borrower defaults on EMI payment.

Deductions of a maximum Rs. 50,000 allowed as per Section 80EE

The section 80EE has been re-introduced as an aid to homebuyers to provide a deduction to the extent of Rs. 50,000. The tax-relief as per the section is available only to new home buyers who have taken a home loan of not over 35 lakh and whose property values less than or equal to Rs. 50 lakh. Also, the financing of such loan should have been effected in the previous FY i.e. April 1st, 2016 to March 31, 2017.

Tax deductions for any processing charges or pre-payment penalty can be claimed

Also, any amount paid as stamp duty or registration charges can be claimed as a deduction.

Deduction on Principal Amount Repayment u/s 80C:

In the case of property sale in five years time from the date of home loan grant, the repayment benefit realized on principal payment gets reversed. Any deduction claimed shall then be added as income for the year in which property sale gets materialized. The principal amount of the home loan is eligible for deduction u/s 80C to the maximum amount of Rs. 1.5 lakh.

On May 25, 2017 by www.taxexcel.net

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Home loan is a blessing in disguise as it will help us achieve our desire of owning a home and help us save tax along with it. The maximum tax benefit for repayment of principle which can be availed under 80C is Rs 1.5 lakh. The tax exemption on the interest paid on home loans is now capped at Rs 2 lakh. Do you know that there is the higher advantage of owning multiple homes and availing loan for the same? Yes, individuals can claim a tax deduction for interest component part in case of the second home also.

Here are some must-know facts for home loan borrowers;

First time home loan borrowers In the Union Budget 2016, a new section 80E was introduced to benefit first time home loan borrowers. The government proposed an additional deduction of Rs 50,000 on interest payment of home loan EMI. Note that this benefit is over and above the earlier limit which was 1.5 (principle)+ 2 lakh (interest) =3.5 lakh. First-time borrowers can avail additional Rs 50,000 on the interest component. So, total and maximum tax benefits one can avail is Rs 4 lakh per year.

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Conditions for first-time buyers Individuals who are applying for the first time should note that they should not own another house owned by him. Individuals will be eligible only if the loan availed is less that Rs 35 lacs and the  property value are less than Rs 50 lakhs. While, the loan should have to be approved between 1st April 2016 and 31st March 2017.

Claiming tax benefit under 80C Home loan borrowers should know that the principle deduction includes all other deductions such as PPF, NSC etc., under section 80C which is capped at Rs 1.5 lakh. Say, for example, if an individual is claiming the benefit of Rs 1 lakh for repayment of the loan then he will be left with Rs 50,000 to claim for exemptions on PPF, NSC etc., altogether.

Tax benefits for co-borrower An individuals who is a co-owner and co-borrower of the house can also claim for tax benefits. Note that if you are a co-applicant to the loan, but, the house is not in joint name, you cannot claim tax benefit. If a home loan borrower is paying the principal amount of Rs 4 lakh, he can avail tax benefit only up to Rs 1.5 lakh under Sec 80C. In the case of a joint home loan, co-borrower can also claim for Rs 1.5 lakh under sec 80C, together they can get Rs 3 lakhs. So it is always a better idea to jointly go for a home loan and ownership of the house.

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Construction period of the property Individuals is not eligible to avail tax benefits on principal payment during the construction of the property. Only once the property is constructed and when you are in possession of the property you can avail tax benefit for the same. One is eligible to claim interest payment on preconstruction period once you are in possession of the property. This deduction benefit will be allowed for over 5 years starting from the year of possession.

HRA HRA can be claimed if you are living in a rented home despite having your own house, you can avail the HRA benefit along with section 80C and section 24. Tax benefits under the section can be claimed only when an individual is receiving house rent allowance as a part of his salary. Individuals who have borrowed the amount from friends and relatives for home loan purpose can avail tax benefits. Note that, individuals will not be eligible for tax benefit on the principal amount, it is only applicable for interest component.

Other tax benefits Along with principal and interest component, other expenses such as stamp duty, registration fee expenses can be claimed for tax benefits under Sec 80C. Also, processing fees charged for availing home loan can also be claimed for tax benefit.

On November 14, 2016 by www.taxexcel.net

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