Availing a home loan is the most sought out option for any individual planning to buy a house. Not only does a home loan help in financing your property but also helps you avail various tax benefits. The benefits can be availed on principal repayment as well as interest repayment.

For principal repayment

You can claim tax exemption under Section 80C of the Income Tax Act, 1961 on principal repayment, but up to a maximum limit of ₹1.5 lac per annum. However, to claim this deduction, the house property should not be sold within 5 years of possession.

For Stamp Duty and Registration Charges

A deduction for stamp duty and registration charges can also be claimed under Section 80C but within the overall limit of ₹1.5 lac per annum. However, it can be claimed only in the year in which these expenses are incurred.

For joint home loan

If the loan is taken jointly, then each of the loan holders can claim a deduction for home loan interest up to ₹2 lac each and principal repayment under Section 80C up to ₹1.5 lac each in their individual tax returns. To claim this deduction, they should also be co-owners of the property taken on loan.

For interest paid on home loan

You can claim tax exemption under Section 24 of the Income Tax Act, 1961 on interest payment of home loan, but up to a maximum limit of ₹2 lac per annum. While for let out property, there is no upper limit for claiming interest, the limit of ₹2 lac applies to self occupied house property. This deduction can be claimed from the year in which construction of the house is completed.

For interest paid towards home loan during pre-construction period

The income tax law provides for the claim of EMIs paid for under-construction property, called as the pre-construction interest. This is deducted in five equal installments starting from the year in which the property is acquired or construction is completed, over and above the deduction you are otherwise eligible to claim from your house property income. However, the maximum eligibility remains capped at ₹2 lac.

For first time home buyers

Additional deduction under Section 80EE is allowed for first time home buyers for maximum up to ₹50,000. To claim this deduction, the amount of loan taken should be ₹35 lacs or less and the value of the property does not exceed ₹50 lacs. The loan must have been sanctioned between 1^st April 2016 to 31^st March 2017, and the individual should not own any other house on the date of sanction of loan.