Those taxpayers paying back home loans can avail the benefits which are enlisted in the Income Tax Act 1961. The taxpayers can claim tax deductions under Section 80C, Section 24B and Section 80EEA. There are approximately four home loan benefits which a person should look out for while filing ITR.
Section 80C provides taxpayers with the option to claim tax benefits for home loans which they are paying back. A total deduction of up to Rs 1.5 lakh can be claimed for the repayment of the principal component of a home loan. These deductions can also be availed on the construction and purchase of a property, though one should note that the construction of property should have been completed within five years from the end of the financial year in which the loan was taken. If due to any reason, the property is sold or transferred within these five years then the tax deductions claimed so far would be reversed.
Section 24B of Income Tax Act, 1961, specifies that tax deduction of up to Rs 2 lakh can be claimed on the interest paid in the pre and post-construction period for self-occupied property per year. In scenarios where a person takes a home loan for the property which will be handed over at a later stage, the payment starts immediately after the approval of loan. Such taxpayers are also eligible for deductions under Section 24B on the interest paid during the pre-construction period for up to 5 years, i.e 5 equal instalments.
As per Budget 2019, if a taxpayer has availed home loans between April 1, 2019 and March 31, 2020, then an additional deduction of Rs 1.5 lakh on interest paid can be claimed as part of the ‘Housing for All’ scheme under Section 80EEA. This deduction is only available if the property’s value is capped at Rs 45 lakhs, which is only applicable for first time home buyers.
Deductions on Stamp Duty
Section 80C allows a taxpayer to claim deductions within the overall limit of Rs 1.5 lakh on the stamp duty, registration charges and other expenses which are directly related to all the charges that are paid while purchasing a property. This deduction can only be claimed in the financial year when these expenses have occurred.