Click here to Download Master of Form 16 Part B for FY 2014-15 [ This Excel Utility can prepare at a time 50 employees Form 16 Part B for Financial Year 2014-15]
A house, besides being a long-term asset, makes you eligible for significant tax breaks as well. You can claim deduction up to Rs 1.5 lakh for repayment of home loan principal under the overall limit of Section 80C of the Income Tax Act. Moreover, you can claim an additional deduction of up to Rs 2 lakhs under Section 24B for interest payment once you get possession and occupy the house.
Also, a joint loan means each of you can claim both these deductions individually, thus optimising your tax savings. If you have paid your municipal taxes in the current year, you can show them as deductions from your total income. A flat 30% of the annual value can also be claimed as deduction for maintenance expenses such as repairs, insurance, etc., irrespective of the level of actual incurred expenditure.
All this is common knowledge and we all know these rules. Here are some lesser-known tax deductions many of us miss out on:
Rebate on Interest Paid Before Possession: Any pre-construction interest is also allowed for deduction only if your project gets completed within 3 years of starting of the construction. Once the house is ready, you can claim the deduction for it within five years from possession in equal installments within the Rs 2 lakhs under Section 24B.
Download Master of Form 16 Part B for FY 2014-15 [ This Excel Based Utility can prepare at a time 100 employees Form 16 Part B for Financial Year 2014-15]
However, if you rent out the property, you can claim the entire interest component as deduction from the rental income as in case of rented property, the actual interest payable is eligible for deduction, thus not being subject to any maximum limit. This applies even in the case where you have two home loans for two different properties, where one is self-occupied and the other is on rent.
Special Offer Under 80EE: The financial year 2013-14 was especially beneficial for first-time home-buyers. The finance minister in his budget speech announced an additional tax deduction of Rs 1 lakh for interest payments on new loans up to Rs 25 lakh, provided value of residential house does not exceed Rs 40 lakh. So, the total deduction under Section 24B for 2013-14 will be Rs 2.5 lakh. Although this is a one-time benefit and it can be claimed over two financial years in a piecemeal manner, that is, one may claim benefit spreading it over FY 2013-14 and 2014-15, however, if your interest component is more than the deduction limit, the balance can also be claimed in the next financial year. Since affordable housing is one of the top agendas of the government, we can expect such special sops in future as well.
Source from Economic Times