Tax Deductions on Home Loan – Section 24(B) and 80(C) Income Tax Act

A good tax professional or loan officer will be able to give you a good idea of what tax benefits to take advantage of taking your choice of home loan.

Are you planning to buy a home to enjoy tax exemptions? Buying a home has not only become a guarantee for a better life, but for tax purposes, home ownership gives the owner more options and benefits than renting. There is no "golden rule "that will determine deductions. But there are ways to overcome this tax problem. Your solution to this would be to buy a home and save on tax too. For this, you must apply for a home loan in order to enjoy tax benefits. Income tax Act covers these under two different sections that are section 24(b) and section 80(c) of the 1961 income tax act.

Loans will be considered under tax exemption only in the following circumstances. You must have taken a loan from a registered bank or financial institution. Remember that any money borrowed from private agencies, chit funds, friends and family will not qualify for tax benefits.

The different types of home-loans required for the interest deduction that includes home loan for property acquisition, property construction and home loan for property repair. If you pay interest on a new loan that you lend to pay your existing loan, then that interest is also applicable for tax sops. But, if you take another loan, which is your third loan in order to pay your second loan, then tax refund is not allowed on your interest payments. The interest that you pay on home loans allows to be deducted from the total annual property value of your home. Total annual home value is calculated when you deduct municipal taxes paid from the gross annual home property’s value.

This will allow you a deduction of up to 1 lakh rupees on the principal amount repaid. Section 24(b) covers the interest payment made to your lender on the borrowed funds. You can qualify for such tax benefits if you have taken a housing loan for construction of house, purchase of house, renovation or repairs of your house are also covered. With the help of these types of borrowed funds you can make use of the loan documents and win a deduction of up to Rs.1, 50,000 of your total liability of tax. If your liability is around 40,000, then you save the whole amount.

Carry out your repairs and renovations by availing a small amount of borrowed funds. Refurbish your house and increase the equity value of your house. While you do this, you can make use of these loan papers to save your tax at office. It serves the dual benefits. ULIP funds, insurance policies and tax saver funds can also help you for the same purpose. Learn more about these funds in order to invest carefully.

Any tax professional will tell you there are many variables that will influence the amount of interest you pay. A good tax professional or loan officer will be able to give you a good idea of what tax benefits to take advantage of taking your choice of home loan. No matter what type of scenario you face, home loan is more affordable than ever.