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30 NOVEMBER, 2021
There are various tax deductions available on a home loan. As per the Income Tax Act 1961, you can claim tax deductions for the home loan interest and principal repayment, from your taxable income. All you have to do is show the repayment amount in your income tax returns (ITR).
Here is a brief guide on the tax deductions available on housing loan interest rate and how to show it in an income tax return. Read on.
You can claim a tax deduction of up to Rs 2 lakh on the interest repayment of your home loan under section 24(b). The property must be self-occupied.
If you are a first-time home loan borrower, you can claim an additional deduction of Rs. 50,000 on your interest repayment under section 80EE. However, the home loan value should be Rs 35 lakhs or less, and the home value should not be more than Rs 50 lakh. Moreover, the home loan should be approved between 1 April 2016, to 31st March 2017.
The tax deduction under 80 EEA is for those first-time owners who cannot claim tax deduction under section 80EE. This tax deduction is available for a maximum value of up to Rs 1.5 lakhs. To claim this deduction, you should not own any other house. The home loan should be sanctioned between April 1, 2019, and 31 March 2020. Moreover, the stamp value of this property should not exceed Rs 45 lakhs.
If you have taken a housing loan for an under-construction house, you can claim the tax deduction on its interest repayment. It is called a pre-construction interest and can be claimed in 5 equal installments. The maximum value of this deduction is Rs 2 lakh on a self-occupied property.
Apart from claiming the tax deduction on interest repayment under the aforementioned sections, you can also claim deduction on the principal repayment. Under section 80C, you can claim a maximum of Rs 1.5 lakhs on the home loan principal repayment in a financial year.
How to Show Home Loan Interest Repayment on the Income Tax Return?
You need to carefully fill the income tax return and ensure that you claim all the available deductions. Knowing about these tax deductions would help you reduce your taxable income and thus save money. Moreover, if you are confused, you must take professional guidance from a taxation expert.
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