Smart Income Tax Benefits to Take advantage of with your home Loan

Home loans are a popular means of financing one’s dream home. Not only do they offer the convenience of repaying the loan amount in easy installments, but they also come with several tax benefits that can help ease the financial burden on the borrower.

Here are Smart income tax benefits to take advantage of with your home loan

1. Tax deductions on principal repayment: Under Section 80C of the Income Tax Act, borrowers can avail a tax deduction of up to Rs. 1.5 lakh on the principal repayment of their home loan. A home loan tax benefit is an attractive proposition for those who want to save on taxes.This deduction can only be claimed on a self-occupied property, and not on a rented property.

2. Tax deductions on interest payment: Under Section 24 of the Income Tax Act, borrowers can avail a tax deduction of up to Rs. 2 lakh on the interest payment of their home loan. This deduction can be claimed on both self-occupied and rented properties.

3. Joint home loan tax benefit: If you have taken a joint home loan with your spouse, both of you can claim deductions on the principal repayment and interest payment in the ratio of the loan amount taken.

4. Pre-construction interest tax benefit: If you are constructing a house, you can claim a tax deduction on the interest paid during the pre-construction period, provided you complete the construction of the house within five years from the end of the financial year in which the loan was taken.