Annual Deductions via Sections 80C and Section 24B
Income tax laws specify principal amount part of loan deductions of up to Rs.1.5 lakh and interest on loan deductions up to Rs.2 lakh under Sections 80C and 24B respectively.
To claim the 80C tax rebate, You need to retain the purchased property for at least the first 5 after acquiring it.
If you sell your house within 5 years of becoming its owner, then your deduction will be reversed.
Similarly, in order to claim under section 24, you should complete constructing your house within 5 years from the end of the financial year in which you obtained the loan.
Stamp Duty and Registration Fee Benefits
If you buy a property worth Rs.50 lakh and the stamp duty and registration charges are set at 1% and 2% each.
You can get a deduction of up to Rs.1.5 lakh under Section 80C by claiming these charges in the year in which you incur .
Tax Rebates on Pre-construction Interest
At times, you may prefer to buy a property that is currently under construction.
This is because you may secure a budget-friendly deal from a builder who is in need of funds to complete the property. Since you will be paying EMIs before the property has been fully constructed, you may be wondering what tax benefits you can claim.
Here, tax rebates on a home loan are limited to the interest component of the loan.
Enhanced Tax Benefits for Joint Loan Applications
As per current IT laws, each member of a joint loan can claim the full range of Section 80C’s and Section 24B’s tax benefits individually.
Additional Reliefs for First-Time Buyers and Senior Citizens
This deduction (up to Rs. 50,000) is over and above the Rs 2 lakh limit under section 24 of the income tax act.
Section 80EE allows income tax benefits on the interest portion of the residential house property loan availed from any financial institution. You can claim a deduction of up to Rs. 50,000 per financial year as per this section. You can continue to claim this deduction until you have fully repaid the loan.