Section 80C: Tax benefit on Housing Loan (Principal Amount)
The amount paid as a Repayment of the housing Loan by an Individual/HUF is allowed as a tax deduction under Section 80C of the Income Tax Act. the utmost tax write-off allowed under Section 80C is Rs. 1,50,000.
This tax deduction is the total allowed under Section 80C. It includes the quantity invested in PPF Accounts, Tax Saving Fixed Deposits, Equity Oriented Mutual funds, National Savings Certificate, Senior Citizens Saving Schemes, etc.
This tax deduction under 80C is also available on a payment basis irrespective of the year in which the payment has been made. the quantity paid as Stamp Duty & Registration Fee is also allowed as a tax deduction under Section 80C even if the Assesses has not taken Loan.
However, the tax benefit of a housing loan under this 80C section for repayment of the principal is allowed only after the construction is complete and the completion certificate has been given. There is no deduction allowed under this 80C section for principal repayment for the years in which the property was under construction.
if you are planning to buy an under-construction property as it is in lower priced as compared with completed property, in that case you would notice that, GST is also charged on under-construction Property. However, there will be no GST if the properties are fully completed.
What happens if you sell out house property within 5 years?
Section 80C(5) also saying that if you transfers the house property on which you have claimed tax deduction under Section 80C before the expiry of 5 years from the end of the Financial Year in which the possession has been obtained, then you won’t be allowed to get the deduction and tax benefit on Home Loan under Section 80C and the amount of tax already claimed in respect of the previous years shall be treated as Income for that year in which the property has been sold and shall be liable to pay tax on such income.
Tax benefit on Home Loan (Interest Amount)
Tax Benefits on Home Loans for payment of Interest on Home Loans can be claimed as Deduction under Section 24 as well as under the newly inserted section 80EEA (Amended by Budget 2020)
Section 24: Tax benefit on interest on loan for purchase/construction of house
Tax benefit on home loan for interest payment is allowed as deduction under section 24 of income tax act. According to article 24, the income from ownership of the house will be reduced by the interest paid on the loan when the money is taken out for the purchase / operation / maintenance / renovation / reconstruction of the house.
The maximum tax exemption provided under section 24 of a self-occupied house is subject to the limit of Rs. 2 Lakhs (increase in 2014 budget from 1.5 Lakhs to Rs 2 Lakhs).
Please note: if the house has not been self-occupied by the owner because due to his work, business or work done elsewhere, he must live in a place other than his own, then the amount how many. The tax deduction given under section 24 is limited to Rs 2 Lakh.
It is also important to note that the loan interest tax deduction of this section 24 is deducted on a payable basis, i.e. on the income statement. Therefore, deduction under section 24 can be claimed every year even if no payment is made during the year, unlike Section 80C which allows deduction only on the basis of ‘debt’.
Also, if the house is not acquired/constructed within 5 years from the end of the financial year of availing the loan, the interest benefit, in such a case, will be decreased from 2 Lakhs to Rs 30,000 only. (Range increased from 3 years to 5 years from 2016-17 financial year)
Exemption for non-personal property {2017 Budget Update}
In the case of non-personal property, the interest paid on the rent is deducted to arrive at the income from the landlord. In some cases, it may happen that the interest paid exceeds the rent received, resulting in homelessness. This loss can be paid from the funds of any other chapter.
The Finance Act 2017 announced on February 1, 2017 included restrictions on the amount of free cash flow in the case of real estate capital that can be offset against other capital assets. From the financial year 2017-18, a loss of Rs. 2 Lakhs can be paid with funds from other principals. This unpaid amount is carried over to subsequent years.
Therefore, the maximum interest deduction that can be claimed for personal property is Rs. 2 Lakhs and for non-personal property – loss under capital not exceeding Rs. – Property Tax – Quick interest should not exceed Rs. 2 Lakhs). In case of freehold property, the interest of more than Rs.2 Lakhs will be forfeited and cannot be deducted since the property is not available, the property of the house which is more than Rs. .2 Lakhs. until next year and allowed to be paid next year.
