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Home Loans Can Help You Save Tax, Here’s How!

Home Loans Can Help You Save Tax, Here’s How!
 

It is a known fact that one can claim tax benefits on housing loans, which not only reduces your tax outgo but also helps in managing your cash flow better. You can claim tax benefits on every principal and interest payment you make against your home loan. Unfortunately, the tax benefits on home loans remain unchanged for FY 2018-2019 as per the Union Budget 2018 announced on 1st February.

Don’t be disappointed because we’ve got you covered by listing all the benefits. Read on to find out the tax exemption on home loan for FY2 018-2019, AY 2018-2019:

Tax benefits for the first home buyers – Self-occupied

On Principal Amount: Under section 80C, a maximum of Rs. 1.5 lakhs can be claimed as investment eligible for tax deduction. For senior citizens, the amount rises to a maximum of Rs. 2 lakhs.

On Interest Paid: Interest paid on the actual home loan is subject to a maximum of Rs. 2 lakhs only if the construction is completed within 5 years from the end of the financial year in which the loan is taken. For senior citizens, the amount rises to a maximum of Rs. 3 lakhs. If the construction of the house is not completed within 5 years, then a maximum of Rs. 30,000 is exempted from your income tax.

Tax benefits for the first home buyers – Rented/Vacant (Deemed to be let out property)

On Principal Amount: Under section 80C, a maximum of Rs. 1.5 lakhs can be claimed as investment eligible for tax deduction. This can be claimed only if the property owner is staying in a different city for work purposes.

On Interest Paid: For the current assessment year 2018-19, the tax benefits on interest have been capped at lower of two, i.e. 1) A claim of maximum Rs. 2 lakhs or 2) actual interest paid for all properties owned by a taxpayer. Also read: Home Loan Calculator to gain Tax Benefits

Tax benefits for second home buyers or who have additional property

On Principal Amount: There are no tax benefits on the principal amount.

On Interest Paid: For the current assessment year 2018-19, the exemption on interest has been capped at lower of two, i.e. 1) A claim of maximum Rs. 2 lakhs or 2) actual interest paid for all properties owned by a taxpayer.

Tax benefits for the ones who have taken loan for under construction houses

On Principal Amount: There are no tax benefits on the principal amount.

On Interest Paid: The interest paid can be claimed in equal parts in 5 financial years post completion or handing over of the property within the overall annual limit of Rs. 2 Lacs

If you want to know how much tax exemption on a home loan you can get instantly, then use our income tax calculator FY 2017-2018 to calculate the same.

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The post Home Loans Can Help You Save Tax, Here’s How! appeared first on Indiabulls home loans.

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