Applying for a Home Loan? Know the tax benefits associated with

Buying a home is one of the most important decisions one would make in their life. It is a dream for many to own a home. In the purview of the rising prices of the real estate property in India most of the people find it difficult to pay for their home out of their own pocket. Therefore, most people approach financial institutions like banks or private housing finance companies to make their home buying process easy. One of the obvious reasons why people take home loans is that the financial institutions provide a major proportion of the funds to buy their dream home. Another significant reason why people avail home loan is that it allows them to get tax benefits under the section 24(b) and section 80C of the Indian Income Tax Act, 1961.

Section 24(b) of the income tax act deal with the ‘Interest’ component of the home loan, whereas section 80C deals with the ‘Principal’ component of the loan. The maximum amount of tax deduction you can avail in one financial year is Rs. 1 lakh and Rs. 1.5 lakhs on the principal and the interest amount you repay.

If you are applying for home loan with a co-applicant you can enjoy joint home loan tax benefit. The tax deduction would be applicable to all the people involved in the loan. An important thing to know about the home loan tax deduction is that your deduction would depend upon the proportion of the loan you have availed. For example – if two people are applying for the loan in the ration of 3:2, then for the loan amount of 50 Lakhs would be spilt in the ratio of 30 and 20 lakhs. While calculating the tax deduction, the respective principal as well as the interest amount would be taken into consideration.

Another important benefit of applying for home on joint basis is that the lender would consider the income of both the applicants, which increase your loan eligibility. This in turn also maximizes your tax deduction. If you wish to buy a home that is under construction, then you can claim your tax deduction only after the completion of your home. If you want to rent out your home, then you would have to pay taxes on the amount of money you receive as rent. Getting a home loan is definitely a great benefit for your tax planning.

If you are availing housing loan from Indiabulls housing finance limited you are liable to get tax benefit under section 24(b) and section 80C of the Indian Income Tax, 1961. If you have any queries about the tax benefits, the loan executives at Indiabulls are always there for your help. We ensure that all your queries are answered and your loan application becomes simple.