How to take advantage of the House Building Loan in 2022? The maximum home loan benefit
that can be claimed as a deduction in
| Section | Deduction allowed | Allowed for |
| Section 24 | Rs. 2,00,000 | Interest repayment |
| Section 80C | Rs. 1,50,000 | Principal repayment |
| Rs. 1,50,000 | Interest repayment |
Therefore, as can be seen from the table above, a deduction for both interest and principal may be required in various sections of the Income Tax Act. These sections, along with the allowable deductions, have been discussed in detail in this article.
Section 80C: Mortgage Loan (Principal)
The amount paid as a refund of the principal amount of a home loan by an individual / HUF is allowed as a tax deduction under section 80C of the Income Tax Act. The maximum tax deduction allowed under section 80C is Rs. 1.50.000.
This tax deduction is the total amount of the allowable deduction under Section 80C and includes the amount invested in a PPF account, fixed deposits for tax savings, stock oriented mutual funds, national savings certificate, savings scheme for seniors etc.
This Section 80C tax credit is available on a taxable basis regardless of the year the payment was made. The amount paid as stamp duty and registration tax are also allowed as a tax deduction under Section 80C even if the taxpayer has not taken out the loan.
However, a home loan tax credit under this section for the repayment of the principal portion of a home loan is allowed only after construction has been completed and a certificate of completion has been issued. No main deductions are allowed in this section for the years the property was under construction.
Also, in case you intend to purchase a property under construction as it is priced lower than a fully completed property, it is also advised to note that GST is also charged on a property under construction. However, the goods and services tax is not levied on fully completed properties.
Section 80C further states that if a taxpayer transfers ownership to a home for which he has claimed a tax deduction under section 80C before 5 years have elapsed since the end of the tax year in which he took possession of it, then no mortgage deductions or tax credits are permitted under section 80C.
The cumulative amount of the tax credit already claimed in relation to previous years is considered the Taxpayer's Income for the year in which the property was sold and the Taxpayer is required to pay the tax on this income.
Tax concessions on the home loan (sum of interest)
Home loan tax credit for the payment of interest on a home loan can be claimed as a deduction under section 24 and also the new section 80EEA (as amended by the 2020 budget)
Section 24: Income Tax Relief on Interest on a Real Estate Purchase / Building Loan
The mortgage tax credit for the payment of interest is permitted as a deduction under section 24 of the Income Tax Act. Subject to Section 24, home ownership income must be reduced by the amount of interest paid on a loan if the loan was taken for the purpose of buying/building / renovating/improving / renovating the property.
The maximum allowable tax deduction under section 24 for property for own use cannot exceed Rs. 2 lakh (increased in the 2014 budget from 1.5 lakh to 2 lakh).
Note: if the property has not been occupied by the owner due to the fact that, in relation to the work, business or professional activity carried out elsewhere, it must reside in this other place not owned by him, the amount of the tax deduction, allowed by article 24 is Rs. only 2 lakhs.
It is also important to note that this section 24 loan interest tax deduction is debt-deductible, i.e. accrual. Therefore, a Section 24 deduction can be claimed each year even if no payments have been made during the year, unlike Section 80C, which allows for a payment-only deduction.
Furthermore, if the property is not bought/built within 5 years from the end of the year in which the loan was taken, the interest rate, in this case, will be reduced from 2 lakh to 30 thousand rupees. (The limit has been increased from 3 years to 5 years starting from the 2016-2017 fiscal year).
The amount of the allowable interest payment deduction on a home loan under Section 24 is as follows:
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| ||||
| Type of Property | Self Occupied Property | Not-Self Occupied Property | ||
| Completion Status | Completed within 5 years | Not completed within 5 years | Completed within 5 years | Not completed within 5 years |
| Deduction Allowed | Rs. 2,00,000 | Rs. 30,000 | No Limit | No Limit |
Deduction for employee ownership {2017 budget update}
In the case of a non-self-contained property, the interest paid is reduced by the rent paid to generate income from home ownership. In some cases it can happen that the interest paid exceeds the rent earned, resulting in the loss of home ownership. This loss can be offset against the income of any other manager.
The 2017 finance law, promulgated on 1 February 2017, placed a ceiling on the maximum amount of losses on properties that can be offset with other income items. As of the 2017-18 financial year, the loss is no more than Rs. 2 lakhs can be counted from the income of other executives. The unaccredited amount is carried over to future years.
Thus, the maximum percentage deduction that can be received for independent ownership is 10,000,000 rubles. 2 lakh, and for dependent property, the loss on parent company property must not exceed Rs. 2 lakh (i.e. rent received - standard deduction - property tax - quick interest must not exceed 2 lakh). In the case of a self-contained property, the interests are higher than Rs. 2 lakhs will be forfeited and cannot be requested as a deduction, while in the event of non-self-ownership the loss from the ownership of the house exceeding Rs. 2 lakhs will be carried over to the following year and can be claimed next year.
Section 80EEA: Home Loan Interest Income Tax Relief (First Time Buyers)
An interest deduction may be required under section 80EEA and also in excess of the allowable deduction under section 24 Rs. 2 lakh plus Rs. 1.5 lakh allowed under section 80C
This Section 80EEA Deduction will only apply in the following cases:
This deduction will only be allowed if the value of the stamp duty on the property purchased is less than Rs. 45 lakh.
1. The loan must be authorized between April 1, 2019, and March 31, 2021.
The previous 3 sections related to home loan tax credits have been summarized as follows:
| Particulars | Quantum of Deduction (Rs.) | |
| Self Occupied Property | Non-Self Occupied Property | |
| Section 24 | 2,00,000 | No Limit |
| Section 80C | 1,50,000 | 1,50,000 |
| Section 80EE | 1,50,000 | 1,50,000 |
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