Even when era changes, the fundamentals for being successful will always remain the same. A highly paid job, medical cover and an owned house is always described as a successful life. A big dream of owning a house is generally accomplished by either taking a home loan, constructing a house or buying an apartment. With all growing technologies and advancement, things have become little complicated. An important point to be kept in mind while availing a home loan is the Tax Benefit on Home Loan. Getting a home loan and understanding the tax benefits related to it is very important to reduce the tax burden. The repayment of home loan can be divided into two components: Repayment of the Principal Amount Repayment of an Interest Amount Different sections of Income Tax Act govern these 2 components and are claimed as Tax Deductions while filing the Income Tax Returns. Home loan can help to save tax on the income. Deductions can be claimed in the income tax against the principal and the interest payments made towards the repayment of the loan. The type and amount of income tax deductions available against repayment of the home loan is completely governed by the Income Tax Laws of Government of India. Home loan have certain tax benefits that can help to reduce the taxable income in a number of ways:

The Principal Amount - Section 80C

The bricks are structured in uniformed way by the Government of India.    The borrowed amount or the principal amount to be repaid falls into Section 80C of IT (Income Tax) Act. The current deduction has been raised from the previous amount of to since budget of 2017. The payment done as a registration fee and stamp duty is approved by Section 80C and can be claimed as a deduction from the taxable income. Tax Benefits of Home Loan are considered as a legitimate exercise when the construction is done and the individual is awarded by the certificate for the same. Section 80C also includes a clause that discuss about the transfer of the residential property on which the deduction has been claimed. The clause states that if the property is transferred before 5 years from the date of the possession, the amount claimed as a deduction in previous years will become taxable in the year when the property is transferred. Interest - Section 24 Its not only the principal amount, but also the interest we pay on the home loan falls under deduction to be claimed. The maximum deduction amount to be claimed has been raised 2,00,000 from the previous budget of Rs. 1,50,000 allowed under Section 24 of a self occupied property. In the case of a rented property, the rent received will be counted as an income and the interest paid will be claimed under deduction. If the received rent is less than the interest paid than it can be set off as a Loss from House Property and can be deducted from the taxable income. It is important to claim the deduction on an yearly basis as it will be counted as the difference between the Section 80C and Section 24 (When the principal amount is paid and the deduction is being claimed). For a better understanding in a simpler way, a comparison between Section 80C & Section 24 is as follows:

Particulars	Section 80C	Section 24
Allowed Tax Deduction	Principal	Interest
Basis of Tax Deduction	Paid	Accrual
Quantum of Deduction	Rs. 1,50,000	Self Occupied property: Rs. 2,00,000 and Non Self Occupied Property : No Limit
Loan Purpose	Purchase / construction of a new property	Renovation/ purchase / construction/ repair/ Renewal of a Residential House Property
Eligibility to Claim	NIL	Purchase/ Construction to be completed within 5 years
Restriction on Sale	Claim would be reversed if property is sold with 5 years	NIL

Single Vs. Joint Names

Availing a home loan in either your name or in the joint name of yourself and your spouse can benefit you with . If the spouse is an earning member than an application in the joint name for the home loan can let you avail a higher amount of loan. Additionally, the tax deduction scan be claimed while filing for the tax returns making it efficient for both. That means both are eligible to claim whole deduction separately.  To understand it in a better way we can discuss it with an example: When Mr.Vikas bought a Home Loan to buy an apartment in Hyderabad, his monthly EMI is 42918/-. for a loan amount of Rs. 50.00 Lacs @ 8.35% for 20 years. His financial adviser told him that his EMI get split into two components, i.e Interest & the Principal Component. Generally in the initial years of taking a home loan, the interest component is higher whereas in the later stage of the loan the Principal Component is higher. The Bank’s Loan Statement states that in the first year the interest component is calculated to be 413680/- and the principal amount will be 101332/-. The total Principal component repaid 101332/- which can be claimed as a deduction under Section 80C. Additionally the other expenses for buying a property like the stamp duty and the registration charges are also eligible for the deduction. The consumer can also plan for the right time of Jan - Mar for the registration to claim for the full deduction with subject to the maximum limit of Section 80C. Similarly the deduction on principal can be claimed from the next year. One can easily avoid to invest in PPF as the principal component completely covers it all. Its always good to show the property as a self occupied to avail the tax deductions. In IT returns one can show that the income from the property as zero and the entire interest of up to 2,00,000 as a loss, which can further be adjusted in taxable income. As stated above, interest paid will be 413680/- For which the exemption can be availed to the maximum limit of 2,00,000 under Section 24 of the Income Tax Act. Even if Mr. Vikas fall in the highest tax bracket, the rebate will be over 30% on the interest paid. Availing a Home Loan in a joint name of Mrs.&Mr. Vikas (who is an earning member) can help you to avail more benefits on tax exemptions. This will not only help to get the higher loan amount but also the maximum limit of 2,00,000 (4,00,000 in total) can be availed individually by the consumer and the spouse while filing for the tax returns.

 Pre EMI / Interest on Pre -Construction

These days its a hyped trend of paying EMI’s and at time (in lack of knowledge) it starts before the construction is complete. So few rules are implied on the home loan of an under construction property:

Loan Purpose	Results
Renovation / Repair / Reconstruction	Before the completion of the property NO Tax deduction is allowed for interest paid in EMIs
Construction / Purchase	If the property is incomplete the interest amount paid will be treated as a tax deduction and would be divided into 5 equal installments for the next 5 financial years.

First Time Buyers - Section 80EE

Section 80EE has been reintroduced in the budget to provide additional benefit of Rs. 50,000 for the first time home buyers over an above the limit of 1,50,000 and limit of 2,00,000 under Section 24. The home loan has to be sanctioned after 1^st April 2016 and the deduction can only be claimed if the value of the property is less than 50Lakhs and the borrowed amount on it is less than 35 Lakhs.

How to claim for Tax Benefits

One needs to serve the Interest Certificate from the Bank and a Loan Account Statement that clearly shows the Principal, Interest Paid and the Prepayment of Borrowed Amount(if any). The above points can help a lot to save taxes by spending and saving wisely.

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