Home Loan is something for which nowadays Individuals specifically Salaried Individuals opt for. Availing a home loan is not a tough task.  However what basically troubles an Individual having no knowledge about taxation is how to avail the benefit of the Interest and the principal component of home loan in their Income Tax returns.

 

In this content we will explain how to claim the benefits of Interest paid on home loan by an Individual.

In Case of a Self occupied property the interest payable on the home loan of a Self-occupied property can be availed as tax deduction u/s 24 (b) up to Rs 2 Lakh. The principal component will be allowed as deduction under section 80C up to Rs 1.5 Lakh.

However for a Let-out property there is no limit, an assessee can claim the deduction of more than Rs 2 Lakh.

In addition to this additional benefit of Rs 50000 for interest on home loan taken by a first –time home buyer under section 80EE is available if the following conditions are satisfied.

   1. The loan must be sanctioned between 01/04/2016 – 31/03/2017. 
  2.The amount of home loan should not exceed Rs 35 lakhs, and the cost of property shall not be more than Rs 50 lakhs.
  3.The individual tax payer should not own any house on the date on which the home loan is sanctioned.

Sometimes money may be borrowed prior to the acquisition or construction of property.  The period starting from the date of borrowing and ending on March 31^st immediately preceding to the year of completion of construction/acquisition is termed as Pre- Construction period.

Pre construction interest is allowed as deduction in 5 equal installments starting from the year in which the acquisition or constructed is completed. To claim the benefit of tax the construction of the house was required to be completed within three years. However, this period of three years have been increased to five years from first day of April 2017 i.e  with effect from A.Y 01/04/2017.

____________________________________________________________________________________________________________________________

 ________________________________________________________________________________________________________________________________