Buying a house is a transforming decision from the financial perspective. The decision can either turn into favour or lead the buyer in a financial pitfall depending on whether or not, the buyer had a budget in place. Now, irrespective of the financial well-being of a buyer, the commonly committed mistake is “exhausting the life-savings in the purchase."
Housing loan, in spite of how much an individual detests the ideology, it was brought into existence to help the prospective buyer’s complete their purchase and concurrently safeguard themselves from vulnerabilities of long-term budgetary issues. Furthermore, the introduction of housing loan instigated and compelled the income tax laws to work in favour of taxpayers. Today, in comparison to preceding times, buying a home has become much easier, and emerged as a viable tax-saving formula.
If comprehend properly, a potential or an existing home buyer can establish an upper hand on his/her tax obligations and save a significant portion of their income from being eaten up by income tax policies.
1. Tax Benefits under Section 24B
The section 24B of the Indian income tax law allows a taxpayer to claim tax benefits of up to Rs 2 lakh in the given financial year from the interest component of the Home Loan.
2. Tax Benefits under section 80C
The section 80C allows a Home Loan customer to avail tax deduction on the amount paid towards the principal debt in the given financial year. The maximum deductions allowed under 80C is Rs 1.5 lakh.
3. Tax Benefits under Section 80EE
Especially for first-time home buyer’s, the section 80EE allows them to claim the additional benefit of Rs 50,000 over and above the deduction allowed under section 80C for Home Loan interest. However, to claim benefits under this section, the property value should be less than Rs 50 lakh and the loan value should not exceed Rs 35 lakh.