I keep hearing that a home loan can help me save taxes. Which are the tax deduction benefits available against home loans? – K. Kher
A home loan borrower gets following types of tax benefits.
Under Section 24b: The interest paid on the home loan up to Rs. 2 lakh in a financial year is allowed as a deduction from the total income. Also, if there is a loss from the housing property, then up to Rs. 2 lakh can be adjusted u/s 24. A loss greater than Rs. 2 lakh can be carried forward for the next eight assessment years (AY) and adjusted against income under the same head.
Under Section 80C: The principal amount paid under the home loan every financial year is eligible for deduction u/s Section 80 (C), subject to a ceiling limit of Rs. 1.5 lakh. You can also include the amount paid as registration charges and stamp duty to claim the deduction u/s 80 C. This deduction is allowed only if you have completion certificate of the property with you.
The tax deduction benefits are also available even if you have taken the loan jointly with a family member such as your spouse. Each individual borrower in a joint loan can get the deductions with the limits prescribed above.
Have a question on personal finance? Ping me on Twitter at @adhilshetty with the hashtag #AskAdhil.