To understand the key tax benefits on a home loan, we are bifurcating the repayment techniques into four major elements-tax benefits on principal repaid, tax benefits on interest paid, deduction on pre-construction interest, and section 80EE income tax benefits. The next section will let you know the concept in detail.
Tax Benefits on Principal Repaid
Under section 80C of the Income Tax Act, the maximum deduction allowed for the repayment of the principal amount of a home loan is Rs. 1.5 lakh. Deduction under section 80C also includes investments done in the PPF Account, Equity Oriented Mutual funds, Tax Saving Fixed Deposits, National Savings Certificate, etc. subject to a maximum of Rs. 1.5 lakhs.
Besides this, there are stamp duty and registration charges that one can claim under the aforementioned section. However, the claim can only take place in the year in which the payment was made.
Nevertheless, there’s a condition under which this repayment of the principal amount of the housing loan is allowed. The deduction is only possible after the house gets entirely completed and there is a completion certificate for the same. The principal amount paid on any under-construction structure/property is not going to be a part of this section.
Tax Benefits on Interest Paid
Under section 24 of the Income Tax Act, one can avail of the deduction on a Home Loan for payment of Interest tax benefits. The self-occupied property allows the deduction with a maximum limit of Rs. 2 lakh if it takes completed within 5 years from the end of the Financial Year, otherwise, the maximum limit is Rs. 30,000.
Interest on housing loans paid for the let-out property is fully allowed in the relevant assessment year in which it is claimed.
From Assessment year 2018-19, the loss from house property head that will be allowed to be set off from other heads of income will be restricted to Rs 2,00,000 in a particular assessment year, and the rest amount shall be carried forward for set-off in subsequent years.
Submit Query for Tax Return Filing Software
Read Also: Tips to Save Income Tax in India
Tax Deduction on Pre-construction Interest
You can also claim interest on a housing loan paid before the completion of the construction of the property. It is termed pre-construction interest. It is allowed in 5 equal instalments beginning from the financial year in which the construction is completed. The limit of 2 lacs will also apply for pre-construction interest in the case of self-occupied property. However, it is fully allowed in case we let our property.
Section 80EE Income Tax Benefit
Section 80EE proposes an additional deduction of Rs 50000 in respect of interest on housing loans to first-time house owners who own a house of Rs 50 lakh or less and have taken a home loan amount of less than or equal to Rs 35 lakh. The loan should be sanctioned between April 1, 2016, and March 31, 2017, to claim a deduction under this section. This deduction shall be in addition to the interest allowed under section 24(b) of the Income Tax Act, 1961.
Deductions Claimed by Individuals Under Section 80EEA
As mentioned under the newly inserted section 80EEA of the Income Tax Act, the government has extended the limit of deduction up to Rs. 1,50,000 applicable to the interest paid by any individual on the loan against residential property.
As per the policies, the deduction is available for individual residents only and for the property having a stamp value of less than Rs. 45 Lakhs.
Also, the loan needs to be sanctioned between 1 April 2019 to 31 March 2022, and the individual should not own any other residential property at the date of sanctioning the loan. Lastly, the person should not be eligible for claiming any deduction U/S 80EE.
Joint Home Loan Deduction
In case the home loan is taken jointly, then the loan borrowers are eligible to claim a deduction of up to 2 lakh each for the home loan interest and principal repayment u/s up to INR 1.5 lakh each in the tax return individually. They all must be co-owners of the property and further it helps in the larger tax claim benefits if in the family itself.
| Deductions | Section | Maximum Deduction (INR) | Conditions |
|---|---|---|---|
| Principal | 80c | 1.5 Lakh | No sale of property within 5 years |
| Interest | 24b | 2 Lakh | The loan has to be taken for construction and has to be completed within 5 years |
| Interest | 80EE | 50,000 Thousand | The loan amount must be under 35 lakhs , and the property value under 50 lakhs |
| Stamp Duty | 80C | 1.5 Lakh | Availed only in the year of expense |
| Interest | 80EEA | 1.5 Lakh | The stamp value of the property is under INR 45 lakh. Taxpayers are not eligible to claim a deduction under section 80EE |
However, in the new tax regime, deduction is not allowed under sections 24(b), 80C, 80EE and 80EEA.
I purchased an apartment in December 2012. Construction is still in progress. I pay EMI and the total EMI paid for FY17-18 is 170199. Can I claim this amount of 170199 under any deduction head while filing ITR for the AY18-19?
Deduction w.r.t. interest is allowed only when the construction is completed. You can claim pre-construction period interest in 5 equal installments beginning from the F.Y. in which the construction is completed. However principal amount repayment can be claimed as deduction u/s 80C
Please collect interest paid certificate from bank, interest will claim in section 24 and principal will claim in 80c
I partially (25% or one living unit) constructed my plot in 2014-15 with my own savings and got an occupation certificate in 2015. I did not rent it out and did not live there. To construct the remaining portion of the house, I took a home loan in August 2017 for Rs 11 lakh from the bank and I am paying EMI since Sept 2017 for Rs 11000/-. Please tell tax implications.
Thanks.
Repayment of the principal amount is to be claimed as the deduction under section 80C. Interest amount can be claimed as deduction depending on whether the property is shown as self-occupied or let out. In the first case, actual interest or Rs. 200000/- whichever is lower is allowed. In the latter case, you can claim the actual amount of interest fully.
Sir, thanks for the reply. What should I write under income from house property in ITR form? Thanks.
I have purchased a flat during FY2014-15 against a loan of 26,00,000/-. I have never claimed against the 80EE section. Am I eligible for the same? If yes, can I claim for the previous years also?
For claiming deduction u/s 80EE, the loan must be sanctioned in FY 2016-17. So you are not eligible for this deduction.
I am paid Rs. 58167/- as interest on the Home loan. But as per return form in 80EE I am only getting 50000/- reduction. How can I claim balance 8167/-
Balance interest can be claimed in income from house property by showing it as a deduction.
Respected madam,
My wife is a govt. Teacher, She has purchased her first house for own use @ 1000000/- on bank loan as on August 2014. The entire loan will be paid within 20 yrs. The loan and interest instalment comes to rs. 10200 /- p.m.
How much interest and instalment amount can be exempted totally per year from her annual income.
Pls. Reply and oblige
Thanking you!
Sunil
Interest will be allowed upto a maximum of Rs. 200000/- (since it is a self occupied property). Principal repayment is allowed upto max of Rs. 150000 (80C deduction)
Hi,
For the FY: 2017-18 my home loan’s remaining interest calculation (after all deductions) is coming out to be < 2lacs.
How can I carry forward the remaining interest from previous years? Should I just increase the Interest component coz currently I have just mentioned FY: 17-18 interest only for the calculation.
Please let me know.
Losses related to previous years are required to be shown in schedule BFLA & CFL.
Hi,
Thanks for your inputs. Are these schedule part of ITR1? I am not seeing anything over there. Also last year I didn’t mention anything like that so how can I use BFLA?
Regards
Anurag
Dear friend, for FY17-18
My home loan interest is 3Lakh50thousand, 2 L is deducted from Annual salary. Met 80C with other investments.
How can I claim the excess tax paid: 1.5 L
Have Let out property for rent with income of of 72K. Please guide
Your rental income net of 30% standard deduction comes to 50400/-. Firstly you will get set-off of home loan interest from this net income.
Remain interested comes to Rs. 296000/- (350000-50400) Then, Rs. 200000/- will be set off from salary income. Remaining interest will be carried forward to the next assessment year.
Please note that if the home loan interest is for self-occupied property, then only Rs. 200000/- deduction will be available. In this case Rs. 149600/- will be set off from salary income and no amount will be carried forward.
Hi,
I have taken a home loan for an under construction property valued at less than 50lac in May 2016. and paying the PEMI Interest. Can I claim under 80EE
PLEASE ADVISE
I buy a new resident flat in May 2016 by a Home loan of 13.50 Lacs which was approved by the bank in July 2016. The above said flat is under construction. Till the date, It ‘s not complete and not handover by the builder. I pay EMI to the bank for above property from Aug-Sept 2016.
Tax certificate issued by them says “This Certificate is issued in order to enable you to claim the deduction from Taxable Income under SECTION 24(b) of the INCOME-TAX ACT, 1961.” The break-up of the amount into Principal and Interest is PRINCIPAL COMPONENT Rs. 13,020.00 and INTEREST COMPONENT Rs. 77,319.00 and PRE-EMI INTEREST Rs. 2,673.00.
My question is:-
a. May I get the tax deduction from the home loan? Which amount is taxable i.e. principle or interest? How to claim it?
b. May I get any tax deduction or benefit from 80EE and Sec-24? If Yes, how I claim it?
c. Which ITR form is suitable for this?
I bought a plot in Hyderabad, HMDA Approved and I was given HOUSING LOAN from INDIA BULLS for Rs 8,19,060/-
Tax certificate issued by them says I can avail tax benefit u/s 24(b) & 80c(2)(xviii). Price Component 40,423/- and Int comp 71,275/-
I neither built any house nor started building a home. I paid tax from salary without considering
Am I eligible for Tax benefit or not? If yes guide me in e-filing income tax.
Deduction u/s 24 & 80C is available only after the house property constructed/acquired.
Hi,
I had 2 home loan as below:
First home – Self occupied and I paid home loan interest from 1999 (jointly with my wife).
I am an owner of this flat jointly with my wife.
Second home- Purchased on 2017 March. My father-in-law is the owner of this flat. But I have taken loan jointly with my wife.
Am I avail HBL interest benefit for Income tax Exemption for the second home.
Can you please tell me which ITR, I have to fill? Also how much loan interest I can claim? HDFC give me an interest certificate as a first borrower.
You cannot claim house loan interest for the property which is not owned by you. Interest related to first home can be claimed according to your share. ITR-1/4 will be applicable if there is income from only one house property. Otherwise, ITR-2/3 will be applicable.
My Home Loan was sanctioned in Financial Year 2017 (Jun-17).
Am I eligible to claim 50,000 Rs in 80EE?
For deduction u/s 80EE, the home loan should be sanctioned between April 2016 to March 2017.
hi,
home loan is taken for 1st home under construction,
loan approved on may 2017
will it be eligible for 80ee
all other criteria fulfilled
As the loan has been sanctioned after the 31st March 2017, you can’t claim deduction u/s 80EE.
DEAR SIR/MADAM
THERE IS TOTAL OUTSTANDING OF MY HOME LOAN OF RS. 1180,000/-
Instalment AMOUNT IS RS. 25000/- PER MONTH
I PAID UP FULL LOAN BY FINAL PAYMENT OF RS. 1180,000/-
THERE IS PRINCIPAL AMOUNT OF RS. 1130,000/-
AND INTEREST AMOUNT OF RS. 50,000/-
NOW HOW MUCH PRINCIPAL AND INTEREST I SHOULD CLAIM IN AY 2018-19
Principal amount is claimed as 80C restricted to maximum Rs. 150000/-. Interest amount can be claimed fully under section 24 (under income from house property).
Dear Sir/ Ma’am,
I bought a flat in 2014 and taken home loan Rs. 20,00,000.00 from OBC. I am paying it on time regularly. My accountant fills return for me every year. I gave him the detail of home loan for last year (Assessment Year 2017-18) the interest I have paid was Rs. 1,87,009. He showed it under section CYLA (House property loss of the current year set off). And ITR officer made it nil as the loss. What should I do now??? I am a consultant teacher. Please help me if something can be done.
Thank you and regards
Where to show in ITR 1 section 80ee amount, because there Is no section 80ee in ITR 1 while e filing. Please advise which head to be use to input 50,000?
Please check department’s utility for ITR-1. 80EE section is provided in deductions.
Hello,
Home Loan Principal Part of 1,50,000 to be claimed under 80C – Under which heading does this needs to be claimed? As in the new ITR 1 the House Loan Principal is not listed at all. Please assist.
Thanks
In ITR-1 utility, there is a single common row to enter 80C deductions. You need to enter consolidated deductions in that row only.
We are constructing one floor more & took loan around 14 lac. Bank gave us 2 lac in March 2018 & instalment starts from April 2018, myself and brother open joint account for that, because property belongs both of us.
What should I do now, while filling tax return?
You can claim the deduction for interest paid u/s 24(b) for improvement in house property.
My question is, Amount cr in my account by the bank in March 2018 & Interest paid by me to the bank in April 2018.
so I have to mention this 24(b) in this 2017-18 or 2018-19 financial year?
If the period of which interest is paid in April, falls under FY 2017-18 then you need to show under 2017-18.
both brother claim half half interest in itr 1 under section 80c
My loan for 30 Lakh was sanctioned in FY 2015-16. However, disbursement was in instalments with 28 Lakh disbursement after April 2016. Cost of the house is 36 Lakh. This is my first house. Possession and Registration were done in November 2017. Keeping in mind the disbursement schedule, will 80EE be applicable for amount released after April 2016 though sanctioned prior.
Under section 80EE, it is specifically mentioned that the sanction date should fall in FY 2016-17. Since this condition is not fulfilled in your case, you cannot claim deduction under this section.
I have taken a Home loan 20L for purchasing a Flat in Feb 2017. Can I avail the deductions?
Sir,
I have taken a Home loan 13L for purchasing a Flat in Feb 2014. Can I avail the deductions Under section 80EE in addition to 2L.
As loan has not been sanctioned between April 2016 to March 2017, you can’t avail deduction u/s 80EE.
My Mom is a housewife who has started earning income from this FY of approx Rs 60000/- per annum (Rs 5000/-per month) from private school tuition. She has registered with Income Tax department this year and will be filing the return. She has also earned LTCG this FY by selling off a joint property held along with my dad. My query is, Will the LTCG received be added along with her other income and taxed as per Tax slab with exemptions up to 2.5 lacs being in the lowest bracket of income OR whether the LTCG received taxed separately @20% (after cost indexation); without taking into consideration of her income tax bracket. Regards
You will get the slab benefit in case of long-term capital gain. The balance LTCG (after adjusting it with slab amount) will be taxed at 20%.
1. We (self and spouse) sold off our joint property for Rs 29 lacs in Sep 2017. The same was purchased by us in the year 2004-05 for Rs 8.3 Lacs.
2. We jointly purchased a new property worth Rs 57 lacs in Mar 2018. This property was under construction since 2014 for which we were paying EMI since then and finally took possession in Mar 2018. The last 7-8 EMIs and expenses on registration, stamp paper etc were paid out of the amount we got from the previous sale mentioned in para 1 above.
3. Can I take the benefit of exemption from paying Long Term Capital Gain (LTCG) for the sold property since I invested the amount in purchasing a new property? The new property sale deed was made in Mar 2018 (within one year of selling the old property) on taking possession.
An early reply, please.
As you have purchased a new house property within 1 year, so you can claim exemption from LTCG arose on a sale of the old property.
Dear Sir/Madam
Let me thank you for this highly impressible blog site to clear doubts regarding tax saving.
I purchased a house site (plot) for Rs. 22,00,000 in FY 2016-2017 without taking any loan. I constructed the house on this plot in FY 2017-2018 and the house was completed in the month of Dec 2017. I borrowed home loan Rs 25,00,000 from SBI for the construction submitting an estimate of construction cost Rs 30,70,500 from an engineer. The loan was sanctioned in January 2017. Since I am a public servant hence I intimated to the employer and also filed immovable property return declaring the transaction as follows:
Purchase of house site for Rs 22,00,000 transaction in the year 2016 – 2017.
Construction of house at cost Rs 32,00,000 (Rs 25,00,000 from loan + Rs 7,00,000 from own saving) transaction in the year 2017 – 2018.
I want to know, How the value of residential house property is calculated for the purpose of income tax benefits?
I am first-time house buyer and did not have any property on the date of sanction of loan. The loan amount is less than 35,00,000 and the loan was sanctioned between 1-April 2016 – 31-March 2017.
Am I eligible to claim the deduction of Rs 50,000 for tax benefit under section 80EE?
As you have taken the loan for construction of house property and as per section 80EE, the deduction is allowed on loan, taken for purchase of property so you cannot avail deduction.
I availed housing loan in Aug 2016, completed construction in July 2017. The paid interest of Rs-70000/- for the year 2016-17 and interest of Rs-3,90,000/- for the year 2017-18. I have let it out on rent and received the rent of Rs-66000 for the year 2017-18.
I have two questions for filing ITR-1 for the AY 2018-19.
1. How to avail pre-construction interest benefit for the amount Rs-70000/- I paid for the year 2016-17.
2. Can I get full benefit on the interest paid for the year 2017-18 (Rs 3,90,000)? I tried filling the amount in ITR-1, after entering all the details under income details but income chargeable under house property shows only (-2,00,000/-).
1) Pre-construction interest will be allowed in 5 equal installments beginning from the year in which construction has been completed.
2) As per the latest amendments, maximum interest can be set off under house property will be Rs. 200000/-, balance deduction will be carry forward for next years. Also you can avail excess deduction of Rs. 50000 u/s 80EE.
I had taken a loan for Purchase of Flat in 2014, and claimed the interest deduction of Rs. 2 lacs in 14-15, 15-16, 16-17 and 17-18 (Total Interest paid is more than 14 Lacs in 4 years). The possession is still not taken and is expected in Dec-2019. From the online search, I am now aware that I could not claim this deduction before possession, and it has been taken incorrectly.
My queries:-
1. How many deductions I could have actually claimed? (Is it 30000/- per year)
2. How can I rectify claims already made
3. How to claim the deduction in 19-20(when the possession will be done)
Thank you.
Interest prior to the possession of house property has to be claimed in five equal instalments beginning from the F.Y. in which the property is actually possessed.
You can file rectification u/s 154 for the ITR’s already filed and processed at CPC. From FY 2019-20, ensure to take correct claim of prior period interest in five equal instalments.
Sir,
At the time of giving proof of investment to my employer as per provisional certificate of loan principal loan payment amount is 90,551/- which is reflected in Form No.16. But now as per final certificate, it is Rs.1,10,846. Can I rectify this amount while filing the return of income? Also, can I claim mu HDFC mutual fund investment while filing ITR which is not reflected in my Form No.16? May I upload copies of these investments while filing the return of income.
Thanks
Yes, you can claim additional 80C deductions while filing your ITR. No need to upload proofs of same.
I m salaried employee. In which column of ITR-1, tax exemption of Rs 2 lakh under Rule 24 is to be entered.
Hi,
If you have loss from house property, you should enter Negative figure in the “Income From House Property”.
Regards,
Abhiram M S
CA Student
I have 2 commercial let out property, total interest paid is Rs.450000/- then what will be interesting allowable u/s 24b for FY 2017-18.
As per amendment total interest from each house property can be allowed up to Rs. 200000.
Hi,
I had 2 home loan as below:
First home – Self occupied and I paid home loan interest Rs. 263844 in the Financial year: 2017-18
Second home- Parents occupied and I paid loan interest Rs. 110000 in the Financial year: 2017-18
Can you please tell me which ITR, I have to fill? Also how much loan interest I can claim?
ITR-2 will be filed if you do not have any business income. For self-occupied property, you can claim the maximum interest of Rs. 200000/-. The second home will be deemed to be let out and you can claim the whole of interest on it.
I took a loan in 2012 and possession in 2016. Can the pre-EMI interest be claimed for next 5 years and if it also has a limit of 2 lakhs? Does this 2 lakh combined with the deduction of interest I am paying for the current financial year?
Yes, you can claim a deduction of the pre-construction period interest. it will be allowed in 5 equal instalments beginning from the year in which construction is completed or possession is taken. If you have not claimed the deduction in the ay 2017-18 for the pre-construction period, then you can claim the remaining balance of 4/5th of the interest amount in the succeeding years. The total deduction that can be claimed as a deduction is limited to Rs. 200000 from AY 2018-19 including the pre-construction period interest.
Hi I have a two-flat in the different location, both the property are under the loan from different banks, I have paid Rs 725844 against one loan and Rs 225000/- against the second loan, both the property are rented out, my query is
Can I claim Total interest paid against both the loan net of Rental Income, I am salaried class and falls under 30% slab
Thanks in Advance
Pankaj
You have to provide details property wise i.e. for each property you have to declare rental income and then can claim interest deduction against that.
I have paid interest on housing during the year 2017-2018, but my employer gave the only rebate for 30000, rest 85000 not rebated, now how and in which column I will put this rest interest amount to get the benefit of interest in ITR 1
Deduction of actual home loan interest paid (subject to a maximum of Rs. 2 lakh) is available if house construction completed within 5 years from the end of the financial year in which loan is taken. If construction of house not completed within five years then Rs. 30,000 is tax exempt. You will get the exemption accordingly.
Housing loan from Dec. 2014 in FY 2017-18
Intrest debited during the year 2017-18 — 1,59,420
Repayment towards Principal——- 19,335
Repayment towards Charges for transfer of loan from base rate to MCLR——- 10,845
Can I claim income tax rebate on the full amount paid against charges in the financial year 2017-18?
Deduction regarding principal and interest only to be eligible.
Question:
Property Offer of Possession Date: Aug 2017
Loan commencement date: 30 Dec 2017
Property Registration Date: 17 Mar 2017
Can I claim income tax rebate on the full amount paid against PreEMI in the financial year 2017-18? Or I will have to claim it in subsequent 5 financial years (1/5 every financial year)?
As pre-construction period starts from the date of loan and end till the end of last FY in which the construction or acquisition takes place, as in your case possession and loan sanction falls in the same year, so there would be no pre-construction period interest. All the amount of interest will be eligible to be deducted in the same FY.
I too had the same understanding but the payroll processor of my company has considered on the 1/5th amount for tax exemption. Before taking it up with them, I wanted to be doubly sure.
Thanks for your reply.
Yes, that will not be considered as pre-construction interest.
Can you please provide me any reference of this rule/act/section from the government/Income Tax website.
You can read section 24(b) of income tax act.
Hi, I have purchased a flat recently in the month of 27th Match 2018. The loan was 27.5 Lakhs and the property value was 30 Lakhs, Can I claim 50K under 80EE?
As deduction u/s 80EE is only allowed if the loan was sanctioned during the FY 2016-17, so you can’t claim deduction under this section.
Hi. Regarding section 80EE “The value of the property should be less than 50 lakhs” – The falt I purchased is 62 lakhs including tax. Excluding tax, it comes below 50lakhs. Am I eligible?
As tax paid by you on purchasing of flat will not be available as ITC to you, so that also has to be part of your cost, so 80EE will not be taxable.
I took a loan of 50Lakh on a property I purchased and can only claim the additional benefit of 50,000 if my loan amount is less than 35Lakh.
Now my question is if I do an advance payment of 15Lakh today to reduce the loan amount to 35Lakh, would it make me eligible for the additional benefit of 50,000 under section 80EE?
Thank you in advance!
As the limit of original loan has to be checked at the time of sanction so any reschedulement of the loan will not change the essence of the loan, so deduction will not be allowed u/s 80EE.
I have taken a loan of 23 lakhs for residential plot and construction. The loan was sanctioned on 9th Nov 2017. I have paid around 48K for interest in last FY. Can I claim 48K under 80EE in FY 18-19?
As deduction u/s 80EE is only allowed if the loan was sanctioned during the FY 2016-17, so you can’t claim deduction under this section.
HI, I have purchased a home recently in the month of Feb (2018). The loan was 38Lakhs and the property value was 47 Lakhs, Can I claim 50K under 80EE?
As your loan amount exceeded limit of 35 lacs, you are not eligible to claim deduction u/s 80EE