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.
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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.
Sir,
I have taken sbi home loan in 2016- 17 financial year….in november 2019 work completed…now AY 2020-21, I calculated pre construction interest up to march 2019 divided in 5 equal part…now total interst for this year comes as 2,80,000/-(1,75,000/ +105000(1 part of precon interest)…can i claim 2 lac under sec 24b and 50,000/- under 80ee ie total 2,50,00/- in AY 20-21??( it satisfy condition of 800e deduction)
PLEASE REFER SECTION 24(b), 80EE AND 80EEA OF INCOME TAX ACT 1961
Dear Sir,
I have recently purchased a property, amounting to less than 45lakhs. And I’ll be able to move by eod of this month i.e. Nov 30, 2020. Here, before moving into that property, my interest paid towards the loan will stand for 45 days approximately around 30000/-. And after moving in can I claim house loan interest?
I request to help me with the current financial year what should I declare in the investment declarations to claim house loan interest paid (Considering Section 24 a,b, 80EE, EEA, etc). And this is my 1st property.
Appreciate and thankful for your advice in advance.
Thank you very much, sir.
PLEASE REFER SECTION 24(b), 80C, 80EEA OF INCOME TAX ACT 1961
Sir, Kindly let me know under what column the “repayment of housing loan” to be shown while filing the ITR-1 by e-filing for AY 2020-21. In the ITR-1 Form, under B2(v) the “interest payable on borrowed capital” appears. Whereas for section 80C of the Income Tax Act, the repayment of the principal amount of home loan column is not appearing the said ITR-1 Form. Kindly let me know where to show the repayment of the principal amount of home loan in the ITR-1 Form by e-filing for the AY 2020-21. Thanks
The repayment of the principal amount of the home loan is to be directly shown under chapter VI-A 80C Deductions.
Thank you Sir.
Hi,
I have 2 properties, one is self-occupied & the other is let out. For AY 20-21, the claim amount u/s 24 is 1.2 Lacs. However, I have a carry forward loss from the previous year of ~80,000. I have been filing ITR-1 till last year. To include the carry forward loss and claim complete 2 Lacs in current AY, do I need to file ITR-2?
Thanks
For claiming complete 2 lacs loss in current AY and for carrying forward of loss you need to file ITR-2
Hi, I and my husband have bought an under-construction apartment that can be possessed in 2023. The total property value will be 70 lac. and we have got a joint home loan of 65L.
1. whether can we avail of the tax benefit from now onwards or after the completion of the construction?
2. according to 80C, the total limit is 1.5L. the principal repayment limit is 1.5L. my doubt is that the Principal repayment limit is apart from the total 1.5L?
3. loan taken for 65 lac. now to avail additional tax benefit for the first time house buyer, can we bifurcate the 65 lacs and avail the benefit?
Thanks in advance
What is the reply given to Mr.Aswini, for his query, can I get this, thanks
Dear SAG Team
I have taken a home loan of 48 Lac in the month of Mar 2020. Where EMI is Rs 48500.
How much Interest and the Principal amount is eligible for this FY 2020-21 and previous year also. Since am got the sanction of Home loan on 19.03.2020.
Please clarify
Please refer section 24(b), 80c, 80ee and 80eea of income tax act 1961
Sir, can we claim interest paid on house property in the year in which house property is sold
FOR CLAIMING INTEREST ASSESSEE SHOULD BE THE OWNER OF PROPERTY
Is there any benefit for the loan taken on commercial property purchased. what kind of loan would be helpful, if a personal loan is taken and invested in commercial property, what are the tax benefits.
Hello SAG Infotech.
If the property is purchased in joint name, does it mean that the stamp value of the property and home loan availed can also be shared on both the name? For example, if property stamp value is 65 lac and loan taken is 74 lac, is it correct that property value can be considered as 32.5 lac and loan can be considered as 37 lac for each owner.
If the property purchased in the joint name then stamp duty value of a property will be bifurcated in the proportion of their ownership share and house loan also taken in a joint name then loan taken is also bifurcated in the ownership share.
I had got the 29lac loan sanctioned in June 2018 from financial coy and got the balance loan of around 23lac was transferred to a bank in July 2019. will I be eligible for interest deduction under Sec 80EEA?
My son and wife jointly purchased an apartment (co-owners) in Aug 2019, for which they have paid 11.0 Lakhs as stamp duty. The payment towards the loan was 75000 for the principal component and 7.5 Lakhs towards the interest. The property is let out.
1) Can each of them claim 1.50 Lakh deduction under section 80C?
2) Considering 50% ownership and equally dividing the income and interest liability, Loss from House property works out to about 2.9 Lakhs per head. Can both of them claim the balance (90,000) as carrying forward losses in schedule CFL?
Thanks in advance for the clarification
1) Yes, 1.5 lakh deduction under section 80c can be claimed by both of them
2) No, Loss from house property can be claimed by both of them in their proportionate shares i.e. 1.45 lakh by son and 1.45 lakh by your wife.
How much to claim a deduction for interest on H/L, apart from 80C 150000. A bank loan is taken for self-occupation in 2013.
hi, sag infotech… I have obtained a loan on dec-2019 the total EMIs that I have paid for 3months for FY19-20. is it that I can claim 80EEA deductions for the 3 months period ?? or can I claim for the whole year i.e jan2020 to dec2020?? . could u please help me with this.
thankyou
Please refer section 24(b), 80EE and 80EEA oF Income Tax Act 1961
my home loan was sanctioned on Feb 2019 but the actual amount was disbursed in April 2019 and sale deed was done on the same month April 2019. Am I eligible to claim for exemption under 80EEA for AY20-21?
Please refer section 80EEA
I have taken a personal loan to renovate our house and the house is in father’s name who has decreased a year ago. Can I avail of tax benefits for the payment of interest?
Please refer section 24(b), 80EE and 80EEA oF Income Tax Act 1961
I have taken loan of 13 lakhs- affordable housing scheme and flat is under construction. It is my first home, so can I claim 50000 under 80EE as other exemption I am not able to claim till possession?
I had purchased the shop in 2017 with a loan from financial company & I had already owned a house in my name so shall I have taken exemption in the Income tax return for Interest & Principal amount on Loan.
Please refer provisions of section 24(b), 80EE & 80EEA of Income Tax Act 1961
My and my wife both are jointly purchased a flat Rs. 22,50 lakhs and house loan took 15 lakhs my and my wife are doing professional business. the EMI was deducted from my wife account my wife is an IT assesses she can avail interest and principal in income tax 24(b) and 80 c sections or both are share interest and principal amount at the time of Income-tax filling interest is accumulated Rs.57,000/- and principal Rs.8500 for 3 months pls give clarification to us
Please refer to the provisions of Section of 80c and 24(b) of Income Tax Act.
Hello
Stamp duty charges and registration fees for an under-construction property as a part of the registration of agreement of sale paid in the month of July 2020 can be filed under the exemption for FY 2019-20 as per new extension of dates in view of COVID pandemic.
Thank you
Yes, you can claim. For further clarification please refer to the notifications.
Dear Sir,
Can exemption under section 80EEA be claimed for the under-construction property?
Thanks,
80EEA can be claimed for interest on loan taken for the purchase of residential house property.
I had taken a home loan for 27 lacs in Jan 2018.
Under what sections I have to file the Interest? Either 80EE or 80EEA or Section 24?
Can you pls help? I am paying an annual interest of Rs 2.1 lacs.
You can claim interest up to Rs 200000 u/s 24. You can also claim u/s 80EE OR 80EEA subject to conditions mentioned in respective sections
In case of Joint Loan, Interest as per Interest certificate is Rs 90000 and Principal Is Rs 160000
So whether both co-owner can avail 90000 each u/s 24 and Rs 1.5 Lac each u/s 80C…? Or Interest amount can be claimed by both co-owner only when Interest and Principal exceed Rs 2 lac and 1.5 Lac..?
And if only one owner pays the Interest and principal then whether it can be claimed by both owners..?
3rd query: One owner is bearing Interest and another pays repayment of principal but payment made from the single bank account. The other party only reimburses the interest portion only. So what would be the claim amount for both of them..?
If the loan is taken jointly, then each of the loan holders can claim a deduction for home loan interest u/s 24 and principal repayment u/s 80C. To claim this deduction, they should also be co-owners of the property taken on loan
I had taken a home loan for 27 lacs in Jan 2018.
Under what sections I have to file the Interest? Either 80EE or 80EEA or Section 24?
Can you pls help? I am paying an annual interest of Rs 2.1 lacs.
Sir
I have taken a housing loan, from LIC HFL to construct the first floor.(Self-occupied)
The loan sanctioned under the category ‘ Extention of House /Flat’. I have paid 82000/- towards interest and 58000/-towards principal.
In this case, how much tax rebate will I get?
Is it a full amount of loan or 30000/-?
You can claim interest under section 24 and principal repayment under section 80C
Hello.
I have taken a loan on 52 lakhs and I bought the property for 70 Lakhs,
Here, tax is deducted from my salary every month, When I applied for the tax deduction, The Accountant has mentioned the stamp duty value is more than 45 lacks. And I have paid only 3,80,000 as stamp duty.
Kindly guide with your expert input so that I could share your input to my HR and accountant,
Hi
Stamp duty value of property means the value on which stamp duty is required to be paid. In your case, if you have paid 3.80 lakhs as stamp duty on 45 lakhs value, then Stamp duty value is 45 lakhs and stamp duty paid is 3.80 lakhs. For submitting the information to HR, you need to mention the principal amount of loan paid during the year and stamp duty paid during the year both of which are eligible for deduction under section 80C up to 1.5 lakhs. Also, interest paid on house loan during the year is eligible for tax benefit under section 24(b) up to 2 lakhs.
I have taken 28 Lacs loan from SBI in the current financial year. Is there any benefit declared by the govt in the bracket of 6-18 lacs /yearly income bracket?
Sir,
I request to inform you that Interest on Housing Loan INR 2,00,000/- u/s section 24 and Principle INR 96,779/- where to shown In form 24-Q for F.Y.2019-20 – 4th quarter as the section 24 column is not provided in Form 24-Q. Regards
Sir, I have taken a home loan on March 2020, total interest 325000, and principle 110000 can I claim the interest part both 80eea and section 24b. please clarify.
Deduction for interest payments up to Rs 1,50,000 is available under Section 80EEA. This deduction is over and above the deduction of Rs 2 lakh for interest payments available under Section 24 of the Income Tax Act. So you can claim interest under both sections
I have taken a loan from a friend for the construction of a house. House construction completed. I am paying interest to a friend. Can I claim interest u/s.24? It is informed that loans must be taken from financial institution ie banks etc now mandatory. from which assessment year it has taken place.
Thank you and regards
Srinivas
You can claim interest u/s 24 if loan taken from bank and financial institution.
I have a housing loan with a joint name me and my father but the house is own by my father only but 100% EMI is debited from my account as my father has no source of income. Do I get tax benefits?
If the loan is taken jointly, then each of the loan holders can claim a deduction for home loan interest and principal repayment if they are co-owners of the property.
Hi Madhav
For claiming tax benefits under income tax act, you need to be borrower and owner both. In your case, i suggest that you should revise the terms of sale deed and become co-owner to the property.
Dear All
Let me know first time home buyer 2019, how much amount exemption will get (Interest Part) under 80EE, What are the supporting documents required to submit while income tax filing.
You can claim deduction u/s 80EE up to Rs 50000 if the loan has been sanctioned between 01.04.2016 to 31.03.2017. For further details kindly refer to section 80EE.
You can claim deduction u/s 80EE up to Rs 50000 if the loan has been sanctioned between 01.04.2016 to 31.03.2017. For further details kindly refer to section 80EE.
Dear Pradeep,
My home possession: June 2016. So, I took rebate on the (Total pre-construction interest amount / 5) for 3 years (in FY 16-17, 17-18, 18-19).
As per the rule, I am eligible to take rebate on the remaining two installments in FY 19-20 (current FY) & FY 20-21.
But my employer saying that these remaining two installments of pre-construction interest amount is not eligible for the rebate, as I have closed(fully paid) my Loan account in FY 18 -19 (last FY).
Could you please confirm this and guide?
Thanks!
In case of loan taken for purchase or construction of a house property, you can claim a deduction on pre-construction interest. The deduction for interest paid before construction or completion is allowed in 5 equal installments from the year in which the house is purchased or the construction is completed.
Sir, I have taken a joint home loan in February 2019. Can I get the benefit of Section 80EE or 80EEA?
There is nothing specific mention about the interest on home loan taken jointly under section 80EE or 80EEA.
I have taken house loan during February 2019 can I get exemption on principal amount and interest paid this is my first-time house purchase
Also, I have paid stamp duty and registration fees for the mortgage and transfer the property on my name total RS. 192000/- stamp duty and registration fees for transfer property on my name.
And availed housing loan stamp duty and registration fees paid 30500/-
Can I claim for 2019-20 AY r2020-21??? please guide
Interest on house loan – If the loan is acquired after 1st April 1999 and construction of the house is completed within 5 years from the end of the financial year in which loan is taken then the amount of deduction for Interest on house loan u/s 24(b) will be maximum Rs 2 lakh otherwise deduction shall not exceed Rs 30000.
Principal Amount:- Deduction u/s 80C will be available for the principal repayment of house loan.
Sir,
I have availed housing loan in July 2018. I and my wife are its joint borrowers. kindly let me know if we can claim deductions under section 80EE or 80EEA. confused to see that deductions under 80EE of Rs 50000 are allowed for loan sanctioned between April 2016 to March 2017 and that of Rs. 150000 are allowed for loan sanctioned between April 2019 to March 2020. What about the in-between period of sanctioning i.e April 2017 to March 2019.
There is nothing specific mention about the interest on home loan taken jointly under section 80EE or 80EEA. Deduction u/s 80EE, 80EEA is not available for the period from April 2017 to March 2019
Dear sir, I took the sanction letter of home loan of 18 lacs in 2012-2013 under CLP plan. Bank paid the amount to the builder as per demand by the builder in installments as per construction. I paid only interest of this amount up to December 2014. From December 2014 I am paying principal and interest both. I received the possession letter in November 2018. Kindly guide me if I am eligible for 2 lacs rebate on interest.
Under section 24 of the Income Tax Act, Rs 200000 will be allowed as a deduction from House Property Income if the construction is completed within 5 years from the end of FY in which loan is taken otherwise Rs 30000 will be allowed as a deduction
how much home loan interest amount will be considered for loan taken more than 45 lakhs, is it 2 lakhs or 3.5 lakhs. please clarify. Thank you.
The interest on the home loan paid for the year can be claimed as a deduction from your total income up to a maximum of Rs 2 lakh under Section 24. The Principal portion of the home loan paid for the year is allowed as a deduction under Section 80C. The maximum amount that can be claimed is up to Rs 1.5 lakh. But to claim this deduction, the house property should not be sold within 5 years of possession. You can claim additional deduction u/s 80EEA for maximum up to Rs 1,50,000. To claim this deduction, the stamp value of the property does not exceed Rs 45 lakhs and loan must have been sanctioned between 1 April 2019 to 31 March 2020.
My yearly interest component is 4 lacs for a loan taken on Apr 2018. The property is self-occupied. Since I can only claim 2 lacs ceiling on interest, is there any provision for claiming the additional 2 lacs loss? If I let out this property, can the full interest component be claimed?
Hi,
My brother and I share the medical insurance premium of our parents. The proposer of the insurance is my brother. I pay him half of the amount. Can I claim half of the amount of the premium under section 80D?
Thanks
Manav
You are not eligible to claim deduction u/s 80D as the proposer of the insurance is your brother.
Why are there no extended benefits like 80 EE or 80 EEA for houses booked in FY 2018-19
Date of Loan sanction is 26/04/18 and flat was occupied on 1/09/2018. Both the schemes 80EE and 80 EEA are not covered for this date particularly. Any reason why only this year is not under special benefits?
In FY 2018-19 section 80 EE benefit is not available.
Dear Sir/Madam,
I have taken a joint loan which was sanctioned on 23-01-18 which comes under FY 2017-18. The loan amount is 10 Lakh and the property value is 45 Lakh. Am I eligible for either 80 EE or 80 EEA? For how much deductions am I eligible?
not eligible for FY 2017-18 or even 2018-19, it is w.e.f FY 2019-2020
Hello Sir/Madam,
I purchased a new house in Jan 2018 (Under construction property).
From Jan 2018 to Aug 2019, I paid home loan interest up to 2 Lakhs (for the under-construction property).
In Sep 2019, I got possession.
In FY 2019 – 2020, I am paying 2.73 Lakhs home loan interest.
Questions:-
1. In which section I will show the interest paid before possession? And how much I can show?
2. Can I show 2.73 lakhs in section 24 in FY 2019 – 2020?
3. Can section 80EE or 80 EEA is applicable to me?
Thanks in advance
In case of under-construction property, you can claim the deduction u/s 24 interest on the home loan in five equal instalments starting from the year in which the property is acquired or construction is completed up to a maximum of Rs 2 lakh. The principal portion of the EMI paid for the year is allowed as a deduction under Section 80C. The maximum amount that can be claimed is up to Rs 1.5 lakh.
If the following conditions are satisfied you can claim deduction u/s 80EE up to Rs. 50,000 per year until the loan is repaid –
Value of the house should be Rs 50 lakhs or less
A loan taken for the house must be Rs 35 lakhs or less
The loan must be sanctioned between 01.04.2016 to 31.03.2017
As on the date of the sanction of loan, no other house property must be owned by you
I had booked flat on Aug 16 and loan approved for 35 lacs on Nov 16 for same. Possession of flat is due on Jan 19.
Below is interest paid in 3 yrs till the date of possession
FY 2016-17 – 28686
FY 2017-18 – 161936
FY 2018-19 – 263270
The interest of current FY 2019-20 will be approximately 273640.
how to calculate the amount for Section 24(B) for interest paid as interest for current FY is exceeding 2lacs?
As this is first home and satisfying all conditions of 80EE, I can declare 50,000 in 80EE.
Do I have option to refile IT returns for previous FY years?
You can claim a deduction of interest paid in earlier FYs as “pre-acquisition interest” in 5 equal instalments beginning from FY 2018-19. However, if it is a self-occupied property, maximum of 2 lacs can be claimed in a particular FY.
Hi,
I have an accumulated pre construction Interest for past 4 years of Rs. 10,26,577.00. Now The house is deemed let out. The house was handed over in April 2019. While filing online returns I am getting only 2,00,000.00 exemption under section 24. How do I claim accumulated interest while filing online return given I will have Interest from House loan more than 2 lakh this year too. So next year will be same issue for me.
Section 24 deductions are capped at 2,00,000. That means even if you have paid interest above 2L, only 2L will be allowed as deduction.
I have purchased a Flat in April 2018 and Took a Home loan on the same month i.e April 2018 and I am a First-time Property buyer with loan amount less than 30 lakhs and Total Property Cost less than 50laks can anybody suggest will I be eligible for Tax claiming under section 80EE.
Deduction u/s 80EE is only allowed to those assessees, to whom a loan has been sanctioned on or before 31/03/2017.
My taxable income is 560000/-. I have used my 80c limit of 1.5 lakh, including my home loan. How I can reduce my tax?
You can invest Rs 50,000 under section 80CCD (1B) in the National Pension Scheme. You can pay Rs 25,000 premium for medical insurance policy(ies) for yourself and family and claim a deduction of Rs 50000 from gross total income under section 80D. This deduction can be up to 75000 if you also pay the medical insurance premium for your senior citizen parents.
I have taken a loan which sanctions in April 2017 with Axis bank. The old loan account was closed in Oct 2018 & the new account was opened in 2018 for the same property. So Can I claim additional interest under section 80 EE under new loan account?
The construction was completed in 2018…