Did you know that you can avail tax benefits on your home loan? Understand your rights and benefits under the section 24 when availing your home loan. Repayment of home loans can be divided into two sections for better understanding
These represent two different sections of the Income Tax Act and are claimed as tax deductions under different sections while filing Income Tax Return.
Under Section 80C of the Income Tax Act, the amount paid as Repayment of Principal Amount of Home Loan by an Individual is allowed as tax deduction. The maximum tax deduction allowed under Section 80C is Rs. 1,50,000. However, tax benefit of home loan under this section is allowed only after the construction is complete and the completion certificate has been awarded. No deduction would be allowed for repayment of principal for those years during which the property was under construction.
Under Section 24 of the Income Tax Act, tax benefit on home loan for payment of interest is allowed as a deduction. The income from house property shall be reduced by the amount of interest paid on home loan where the loan has been taken for the purpose of purchase or construction, repair or renewal or reconstruction of a residential house property. The maximum tax deduction allowed of a self-occupied property is subject to a maximum limit of Rs. 2 Lakhs.