Take home loans as an option to have financial benefits instead of financial burdens. Home loans offers tax benefits that can reduce your tax liability.
Home loans= principal + interest
Deduction of interest:-
The interest paid for home loans gets the deduction u/s 24 of income tax act. Deduction on interest payments are available for purchase, construction, repairs and reconstruction of property. We can claim deduction of interest every month. Interest also consists of processing fees taken at the time of taking loan.
Amount of deduction for self occupied property is 1.5 lah rupees
Amount of deduction for let out property is actual amount spent
Deduction of principal:-
Deduction of principal paid for home loans is available u/s 80c. Maximum deduction under section 80c is 1.5 lakh which is clubbed with epf, insurance premium, school fees etc.
Clubbing of deduction on stamp duty and registration fees is only for fy in which property is purchased.
Deduction of principal is only in case if property is self occupied.
Deduction shall be disallowed if the property is sold within 5 years of purchase
Keep in mind the deduction of interest and principal can be availed separately for both husband and wife. I.e aggregate amount of deduction can be 6 lakhs.
Amount borrowed for renovation of house can be claimed as deduction upto rs.30000/- of interest paid, if the house is self occupied.
Taxpayers are advised to verify the tax credits available in 26AS statement before filing the Income Tax Return. It will facilitate faster processing and quick refunds. In order to avoid the TDS mismatch i.e if your claim of TDS is higher than the tax credits available in 26AS statement, please contact the Deductor for filing of the correction TDS statement.