The deadlines are close, but before you file your returns make sure you have used all the benefits that your housing loan gives. Because your home loan can help you save tax!
The repayment on your housing loan is split into two components, interest and principal. Further, when you file your returns the section in income from house property has two divisions. One is ‘let-out’ property and the other is ‘self-occupied’ property.
The interest paid on housing loan is directly deduced from the income you have earned. However, there is a ceiling limit of rupees 2 lakhs when the house is self-occupied and there is no limit on this amount when the property is let-out. The condition, however, remains that you must complete the construction or acquisition of the said property within five years of the end of the financial year the loan was taken.
You can also avail a deduction of rupees 30,000 if you have a loan for repairs and renewal or reconstruction of house property. Such reduction in income on account of interest on borrowed capital is due under section 24.
For the principal amount repaid you can claim a deduction under section 80 C, however, this limit is rupees 1.5 lakhs including all other components of deduction. The condition here is that the house property should not be sold within 5 years of possession of such property or else it will be added back to your income. You can also avail stamp duty registration charges in the year of expenses under section 80C.
If you are a first-time homebuyer, then the additional deduction under section 80EE is available for an individual assesse. This deduction is in addition to the ones mentioned above.
There are a few conditions given below you must satisfy to avail this benefit:
• This must be your first house
• you should not own any other house property on the date of sanction of loan
• loan has been sanctioned between 1/4/2016 to 31/3/17
• value of such property does not exceed rupees 50 lakhs
• loan taken is maximum rupees 35 lakhs
• loan is taken from a financial institution
So, make sure you avail of all the benefits that your housing loan comes with!