One of the most important financial decisions you’ll ever make is taking out a Home Loan. Not only does it help you secure your dream property, but it also offers you an opportunity to save money through tax deductions. A Home Loan eligibility calculator is one of the best ways to understand your loan capacity and plan accordingly. And on your Home Loan, as a homeowner, you can claim several tax benefits on the interest paid and the principal repaid on your Home Loan. Here are five smart ways to use your Home Loan to get tax benefits.
1. Use the interest you pay on your Home Loan to offset your taxes
As a homeowner, you are probably all too familiar with the never-ending bills that seem to come with owning a home. In addition to your mortgage, there are property taxes, insurance, utilities, and more. It can be easy to feel like you’re drowning in debt. However, there is one silver lining: the interest you pay on your Home Loan is tax-deductible tmarines.com. This means you can deduct the interest from your taxes. This way, you can reduce your overall tax bill.
Of course, you’ll still need to make monthly payments for your Home Loan. But knowing that you’re saving money on taxes eases the financial burden.
Next time you feel overwhelmed by your homeownership expenses, remember that the interest you’re paying is working hard to offset your taxes.
2. Joint Home Loan
Taking out a Home Loan is a big financial decision and one that can come with some hefty tax implications. However, when a loan is taken out jointly between two co-owners, the interest deduction can be claimed up to Rs. 2 Lakh each. Additionally, the principal repayment can be claimed up to Rs. 1.5 Lakh each under section 80C of the Income Tax Act.
It’s important to note that both co-borrowers must also be co-owners of the property to qualify for these deductions. When considering taking out a Home Loan with another person, it may be worth doing so jointly to maximise Home Loan tax benefit.
3. Registration charges and stamp duty repayment
Section 80C of the Indian Income Tax Act allows for a deduction on several expenses, including stamp duty and registration charges. The deduction is capped at Rs. 1.5 lakhs, but it can be claimed in the year that the expenses were incurred. This provision can be helpful for taxpayers who are looking to reduce their tax liability. For example, if a taxpayer incurred Rs. 1.5 Lakh in stamp duty and registration charges in 2020, they could claim a deduction of Rs. 1.5 Lakh on their 2020 taxes. This deduction reduces the taxpayer’s tax amount and can help lower the overall tax bill.
4. Interest accrued on mortgage loans during the pre-construction phase
You can claim a tax deduction on the interest incurred during the construction phase of your house. This applies to the period during which construction of the house had begun and before it was occupied.
5. Repayment on the principal
The Income Tax Act provides certain deductions that individuals can claim to reduce their tax liability. For example, section 80C of the Act allows for a deduction of up to Rs. 1.5 Lakh on paying EMIs towards a Housing Loan. This deduction is available for the EMI’s principal component.
However, a condition is attached to this deduction – the house should not be sold within five years of its possession. And in case sold within this period, the amount deducted as per Section 80C will be added back to the individual’s income in the financial year in which the sale takes place.
Understanding these tax provisions can help you save money on your Home Loan. In addition, knowing which deductions are available and taking advantage of them can help Vessel Tank Cleaning reduce your overall tax burden and make your Home Loans more affordable.
When you’re considering taking out a Home Loan, be sure to do some research and try to get a maximum Home Loan tax benefit.
Always use the Home Loan eligibility calculator and the EMI calculator to ensure that you are in a comfortable financial position before taking any further decision.
