Amidst the Corona epidemic, most of the government and private banks in the country are providing home loans at an interest rate of 6.80% to 7.50%. According to banks, this is the lowest interest rate in the last decade.
That is, you can fulfill your dream home by paying less EMI. Not only this, after taking a home loan, you can also avail many other benefits including income tax exemption. This will save you too. Let us know what kind of benefits you can avail on a home loan.
1. Income Tax Exemption on Principal
The monthly installment (EMI) of a home loan consists of two parts. First payment of principal and second payment of interest. You can claim exemption under section 80C of Income Tax on the payment of principal. You can claim a tax exemption of Rs 1.5 lakh on the principal repayment of the home loan.
2. Rebate of two lakhs on interest
You can also claim tax exemption on the interest paid on the home loan. The interest paid on the home loan is tax exempt under section 24B. You can take a maximum exemption of up to Rs 2 lakh in any one financial year. There is no upper limit for claiming interest deduction on rental property.
3. Double the profit on joint home loan
By the way, from the income tax point of view, the benefits of both joint and individual home loans are the same. But in case of a joint loan, the overall tax benefits are higher. In case of a joint home loan, two or more co-borrowers can claim tax exemption under section 24(b) and section 80C of the Income Tax Act. By doing so, a combined limit of Rs 3 lakh under section 80C and Rs four lakh under section 24(b) can be availed.
4. Under construction property can be better
If you want to buy a house, then it can prove to be better to choose a property on which work is already going on. Income tax rules allow you to claim the entire interest paid during the pre-delivery period. This is reduced to you in five equal installments starting from the financial year in which the construction is completed or you have acquired the property. In case of self-acquired property, the maximum deduction you can claim per annum is Rs 2 lakh.
