Here is How to Claim Tax Benefits on your Home Loan

When one applies for a home loan, they can benefit from a housing loan interest deduction on the principal and interest paid on the loan. To claim these benefits under the Income Tax Act, the borrower needs to follow certain steps and provide necessary documents to the Income Tax Department and also know about the new tax slab 2023. This article will provide an overview of how to claim tax benefits on a home loan, highlighting the various sections under which deductions can be claimed.

Claiming tax benefits on home loan

• Claim deduction under Section 80C: Individuals applying for home finance can claim tax deduction as per Section 80C of the Income Tax Act, up to a maximum of Rs.1.5 lakh per annum. To claim this deduction, the borrower needs to provide the certificate of interest and principal repayment provided by the lender.
• Claim deduction under Section 24: The interest on a home loan is eligible for tax deduction under Section 24, up to a maximum of Rs.2 lakh per year for self-occupied properties. For rented properties, there is no upper limit on the amount of interest deduction that one can claim.
• Claim deduction under Section 80EEA: First-time homebuyers can claim an additional deduction of up to Rs. 50,000 on the interest of a home loan under Section 80EEA. To claim this deduction, the borrower needs to fulfil certain conditions such as the value of the property should not exceed Rs.45 lakhs.
• Submit proof of ownership and loan repayment: To claim tax benefits on a home loan, the borrower needs to submit proof of ownership of the property and repayment of the loan to the Income Tax Department. This can include documents such as the sale deed, loan statement, principal repayment, etc.

In essence, a housing loan interest deduction can help reduce the tax liability of the borrower. By following the steps outlined above and providing the necessary documents, borrowers can claim deductions on both the principal and interest amounts under various sections of the Income Tax Act. This is a valuable benefit that borrowers can take advantage of to reduce their tax burden.

Read Also: Maximize Tax Savings Tips in FY 2023–24