LIVE TV
India
Photo: Freepik
Recommended Stories
Thousands of first-time home buyers are seeking information on tax relief. A person who takes a home loan receives income tax benefits under several sections, including Section 80C, Section 24, and Section 80 EEA. These sections are advantageous and provide a benefit of up to Rs 5 lakh, making it a very appealing option.
Section 80C
The income tax benefit under section 80C for a first-time homebuyer is up to Rs 1.5 lakh. This tax benefit is available under both the home loan stamp duty and the home loan principal categories. There are some conditions attached to this tax benefit claim, such as the borrower's obligation to keep the property for at least five years from the date of possession.
Section 24
Section 24 of the Income Tax Act provides for a tax exemption of up to Rs 2 lakh for home buyers. This exemption would be classified as home loan interest. However, such an exemption is subject to a condition, which is that a family member or even the taxpayer must reside in the property for which the loan is taken.
Section 80 EEA
Section 80 EEA also provides a tax break of up to Rs 1.5 lakh for first-time home buyers. However, the condition over here is that the stamp duty value of the residential property be limited to Rs 45 lakh. Furthermore, the approval should be valid from April 1, 2019 to March 31, 2022.
Fundamental conditions to remember:
- The borrowed loan must be funded by a financial institution.
- There should be no claim under income tax section 80EE.
- Until the loan is approved, assessees must not own any residential property.
Assume that a person purchases a house for Rs 50 lakh and takes out a loan for Rs 40 lakh, i.e., an 80 percent loan with a 7 percent interest rate over a 20-year period. The EMI for such a loan would be Rs 31,000, with a total payment of around Rs 3,72,000 in the first year.
The Rs 95,000 claim can be taken under 80C, whereas the Rs 55,000 (from the Rs 95,000) claim can only be taken for stamp duty payments and is valid for the first year. Annual earnings are currently set at Rs 15 lakh, with a maximum of Rs 20 lakhs allowed under Section 24.
Individuals can also claim Rs 77,000 in interest under Section 80EEA.
It is always better to do complete research before zeroing in on the best possible option that works for you, before purchasing a home.
