- IN THE NEWS X
- It’s time to clear your advance tax liability
- Seniors need to submit Forms 12BBA, 15G, 15H to save on TDS: Experts
- How investing in 54EC bonds can help you save tax on long-term gains
- New income tax forms are out for new assessment year 2022-23. Find out which one you should use
- New ITR forms need income disclosure from foreign retirement a/cs
- Why is March 31 an important date for taxpayers? Find out
- Not filed ITR yet? Face penalty or even jail term, say analysts
- March 15 Is The Last Date To Pay Advance Tax: Time To Clear Your Liability
- It's time to deduct TDS if rent exceeds Rs 50,000, say analysts
- Clarification on capital gains tax on early redemption of Sovereign Gold Bonds is required – Here’s why
- Second amendment to LLP Rules will ease procedural burden: Experts
- Three Things To Keep In Mind Before Investing In RBI’s Sovereign Gold Bonds
- Tackle low liquidity in sovereign gold bonds by laddering, say analysts
- CBDT, tax tools make e-filing of I-T returns simpler
ITR Filing 2024: Without this document, you can't claim an income tax deduction on home loan interest
Written by Gagandeep Arora Printed on - Date - 7th May 2024
The deadline for filing income tax returns is around the corner for financial year 2023-24. It is the time of the year when confusion begins for taxpayers regarding deductions and exemptions. The most discussed topic every year for a home loan borrower is whether they can claim deductions on the interest of their housing loan before moving into their new home.
An important aspect to understand before filing your Income tax return for the financial year 2023-24, it can be tricky for a few taxpayers. In this article, we'll answer this question about claiming tax deductions on housing loan interest before moving in. We'll explain this to help you make smart decisions when filing your taxes.
Understanding how home loans affect your taxes is important. Let's break down the tax benefits you can get in simple terms.
First, the Income Tax Act has two main sections: Section 80C and Section 24B. Under Section 80C, you can get a tax deduction of up to Rs 1,50,000 on the principal amount of your home loan. This applies even if your home is still being built. So, whether your home is ready or not, you can claim this deduction.
Now, let's talk about interest payments. Section 24B allows you to claim a deduction of up to Rs 2 lakh on the interest you pay on your home loan. Plus, if you're a first-time home buyer and the cost of your home is under Rs 50 lakh, you can get an additional deduction of Rs 50,000 under Section 80EE. But there are some conditions you need to meet, like being a first-time buyer and meeting the cost criteria.
But here's the catch: You can't claim this interest deduction until you possess your home. So, if your home is still under construction, you'll have to wait until it's finished and you have the keys in hand.
Now, what if you've bought an under-construction property? Can you still get tax benefits? Yes, you can! You can claim the deduction on the principal amount under Section 80C from the very first year of your loan. But for interest payments, you have to wait until the construction is complete and you have possession of the property.
Here's how it works: You can claim the deduction on interest payments in five equal instalments over the next five years after the construction is done. However, there's a limit to how much you can claim each year. It's capped at Rs 2 lakh per financial year under Section 24B.
To sum it up, while you can get tax benefits on both the principal and interest of your home loan, you'll need to wait until your home is finished and you have the necessary documents to prove it before you can claim the deduction on interest payments. So, if you're planning to buy a home or already have one under construction, keep these points in mind to make the most of your tax benefits.
An important aspect to understand before filing your Income tax return for the financial year 2023-24, it can be tricky for a few taxpayers. In this article, we'll answer this question about claiming tax deductions on housing loan interest before moving in. We'll explain this to help you make smart decisions when filing your taxes.
Guidelines for a Home Loan Interest
Understanding how home loans affect your taxes is important. Let's break down the tax benefits you can get in simple terms.
First, the Income Tax Act has two main sections: Section 80C and Section 24B. Under Section 80C, you can get a tax deduction of up to Rs 1,50,000 on the principal amount of your home loan. This applies even if your home is still being built. So, whether your home is ready or not, you can claim this deduction.
Now, let's talk about interest payments. Section 24B allows you to claim a deduction of up to Rs 2 lakh on the interest you pay on your home loan. Plus, if you're a first-time home buyer and the cost of your home is under Rs 50 lakh, you can get an additional deduction of Rs 50,000 under Section 80EE. But there are some conditions you need to meet, like being a first-time buyer and meeting the cost criteria.
But here's the catch: You can't claim this interest deduction until you possess your home. So, if your home is still under construction, you'll have to wait until it's finished and you have the keys in hand.
Now, what if you've bought an under-construction property? Can you still get tax benefits? Yes, you can! You can claim the deduction on the principal amount under Section 80C from the very first year of your loan. But for interest payments, you have to wait until the construction is complete and you have possession of the property.
Here's how it works: You can claim the deduction on interest payments in five equal instalments over the next five years after the construction is done. However, there's a limit to how much you can claim each year. It's capped at Rs 2 lakh per financial year under Section 24B.
Conclusion:
To sum it up, while you can get tax benefits on both the principal and interest of your home loan, you'll need to wait until your home is finished and you have the necessary documents to prove it before you can claim the deduction on interest payments. So, if you're planning to buy a home or already have one under construction, keep these points in mind to make the most of your tax benefits.
