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Home » A Savvy Homebuyers Guide for Maximizing the Tax Advantages of Housing Loans

A Savvy Homebuyers Guide for Maximizing the Tax Advantages of Housing Loans

For most of us, buying a home completely with our funds isn’t possible due to the nation’s rising real estate prices. A house loan thus becomes a better option. It not only makes homeownership desires possible, but it also provides significant tax benefits.

Buying a house is one of the most important financial decisions you will ever make. This investment has several financial advantages, including tax advantages. Homebuyers can maximize their savings and minimize their tax obligations in 2024 by taking advantage of several tax benefits. This is your full guide to maximizing your housing tax benefits in 2024.

People who apply for a home loan may be eligible for tax incentives under Section 80 EEA and Section 24B, which offer income breaks of up to Rs. 1.5 lakh. We are going to discuss the many tax advantages associated with home loans in this post.

Various Income Tax Act Sections for Home Loan Tax Rebates

Home Loan Tax Rebate Sections Maximum Deduction (Per Annum) Conditions
Section 24b Up to Rs 2 lakh For self-occupied properties, the top limit is Rs 2 lakh; there is no upper limit for rented or presumed-to-be-rented buildings. 
Section 80C Up to Rs 1.5 lakh Applicable to the repayment of the principal.
Section 80EEA Up to Rs 1.5 lakh Extra deduction for first-time homeowners who satisfy certain requirements.

 

Benefits of Income Taxes on Home Loans

A home loan is eligible for deductions under three separate sections of the IT Act. Principal and interest are the two components of a house loan. According to income tax regulations, you may be able to deduct the repayment of both of these parts. Let’s look into these parts of the housing tax advantages in more detail:

1. Section 80C Housing Loan Tax Advantages

You can deduct taxes on the principal sum you repay to your lender under Section 80C of the IT Act. This discount also applies to your home’s stamp duty and registration costs. In a fiscal year, the maximum amount of home loan tax exemption allowed under Section 80C is Rs. 1.5 lakhs. Be aware that section 80C also applies to several other investment choices, including tax-saving FDs, PPF, and ELSS funds. If you have made investments in these kinds of products, the Rs. 1.5 lakhs deduction cap will not change.

  1. Benefits of Home Loan Tax under 24(b)


Income tax rebates on home loans are provided by Section 24(b), but it is limited to the interest portion of the loan. It also applies if you have taken out a loan to build or renovate a home. You can deduct the amount from the prepayment and processing fees you make to your lender.

You are eligible to deduct the entire interest payment if you have rented out the property you acquired. Nonetheless, the maximum deduction amount in a fiscal year is Rs. 2 lakh if you have occupied the property.

  1. Advantages of Home Loan Tax under 80EE

Only new home buyers are eligible for these home loan tax savings. If you meet certain requirements, you may be eligible for extra deductions under Section 80EE of up to Rs. 50,000 if this is your first time buying a home.

The maximum house loan sum to qualify for this benefit is Rs. 35 lakhs, and the maximum cost of the property to qualify for it is Rs. 50 lakhs.

Deduction for a Joint Housing Loan

Here are the Co-owner’s benefit when it is about Joint Home Loans because they can deduct more money. Depending on their respective shares in the loan and the property, each co-owner may claim these exemptions on their own.

Tax Benefit Sections Component Maximum Deduction Conditions
Section 24(b) Interest Up to Rs 2 lakh This loan is only available for the purchase or construction of new houses. It must be finished within five years of the end of the financial year in which it was taken out.

 

Section 80EEA Interest Up to Rs 1.5 lakh Applicable to properties up to Rs 45 lakh in stamp value.
Section 80EE Interest Up to Rs 50,000 Applicable for loans up to Rs 35 lakh and properties up to Rs 50 lakh in value.

 

 

Section 80C Principal Up to Rs 1.5 lakh Applicable if the property is not sold before the five years of possession is over.
Section 80C Stamp Duty Up to Rs 1.5 lakh Must be claimed during the same fiscal year that the funds were expended.

 

 

Borrowers of joint home loans are eligible for these deductions as long as they fulfill the previously indicated special requirements. It is crucial to investigate these possibilities in order to maximize tax benefits and to speak with professionals for precise advice.

 

Find the Best Home Loan Provider

Because there are so many methods to reduce your taxes with a house loan, first-time borrowers may find it difficult to maximize their deductions. It is crucial to select a lender cautiously as a consequence. Select a reputable lender who can provide thorough advice on home loan tax exemption regulations.

This will not only help you realize your dream of owning a home, but it will also result in significant tax payment savings.

Best Home Loan Providers in 2024

Bank/Finance Company R.O.I (Reducing Per Annum) Processing Fees Loan Amount Cibil Score
HDFC Bank Home Loans 8.45% – 10% 0.5% – 1% 5.00 Lacs – No Limit 650
Kotak Bank Home Loan 8.75% – 10% N/A 20.00 Lacs – No Limit 700
Bank of India Home Loan 8.5% – 10.75% 0.25% – Rs.10000 10.00 Lacs – No Limit 675
Canara Bank Home Loan 9.25% – 13.8% N/A 10.00 Lacs – No Limit 675
Aavas Housing Home Loan 9.9% – 18% 1% – 1.5% 25.00 Lacs – 5.00 cr 650
Bajaj Housing Finance Home Loan 8.45% – 10% 0.2% – 0.5% 5.00 Lacs – 75.00 cr 650
PNB Housing Home Loan 8.75% – 14% 0.25% – Rs.10000 5.00 Lacs – 20.00 cr 625
Shri Ram Housing Finance Home Loan 11.5% – 13% 1% – 1.25% 10.00 Lacs – 1.00 cr 650
We Rize Home Loan 10% – 18% 0.5% – 1% 5.00 Lacs – 75.00 Lacs 650
Mahindra Finance Home Loan 9% – 15% 1% – 3% 3.00 Lacs – 75.00 Lacs 650
Capri Global Bank Home Loan 9.5% – 15% 1.25% – 1.5% 10.00 Lacs – 1.50 cr 650
Tata Capital Home Loan 8.6% – 11% 0.2% – 0.5% 30.00 Lacs – 7.00 cr 750
Aditya Birla Home Loan 8.9% – 11% 0.5% – 1% 25.00 Lacs – 25.00 cr 675
Piramal Finance Home Loan 10.5% – 14% 1% – 1.5% 30.00 Lacs – 5.00 cr 650
Satin Housing Home Loan 11% – 18% 2.5% – 3% 5.00 Lacs – 1.00 cr 700
Indiabulls Finance Home Loan 9.4% – 10% 0.5% – 1% 20.00 Lacs – 5.00 cr 675
Federal Bank Home Loan 8.5% – 10% 0.5% – Rs.13000 50.00 Lacs – 20.00 cr 675
IDFC Bank Home Loan 8.85% – 9.25% 1% – 1.5% 10.00 Lacs – 5.00 cr 680
ICICI Bank Home Loan 8.6% – 10% 0.25% – 0.5% 50.00 Lacs – No Limit 700
Axis Bank (Asha Home Loan) 9.9% – 14% 0.5% – 1% 5.00 Lacs – 1.00 cr 700
Yes Bank Home Loan 9.4% – 10.5% 0.25% – 1% 50.00 Lacs – 10.00 cr 700
Yes Bank Home Loan (Small Segment) 9.9% – 11% 1% – 1.25% 5.00 Lacs – 1.00 cr 680
Standard Chartered Home Loan 8.5% – 10% 0.5% – 1% 25.00 Lacs – 25.00 cr 700
Jana Small Finance Bank Home Loan 10.5% – 13.5% 1% – 1.5% 5.00 Lacs – 3.00 cr 650
DCB Bank Home Loan 9.75% – 14% 0.5% – 1% 30.00 Lacs – 3.00 cr 650
SBI Bank Home Loan 8.5% – 10.4% N/A 10.00 Lacs – No Limit 650
Bank of Maharashtra Home Loan 8.5% – 9.65% N/A 10.00 Lacs – No Limit 675
Indian Bank Home Loans 8.5% – 10.4% N/A 10.00 Lacs – No Limit 675
Union Bank of India Home Loan 8.5% – 10.8% N/A 10.00 Lacs – No Limit 675
Central Bank of India Home Loan 8.5% – 10.4% N/A 10.00 Lacs – No Limit 700
Bajaj Finserv Home Loan 8.5% – 10% 0.2% – 0.5% 20.00 Lacs – 15.00 cr 700
L&T Finance Services Bank Home Loan 8.5% – 9.5% 0.25% – Rs.10000 30.00 Lacs – 3.00 cr 650
Vistaar Finance Home Loan 13% – 21% 2% – 2.5% 5.00 Lacs – 50.00 Lacs 650
IIFL Bank Home Loan 8.9% – 14% 1% – 1.25% 5.00 Lacs – 50.00 Lacs 650
Aadhar Housing Finance Home Loan 10.5% – 14.75% 1% – 1.5% 5.00 Lacs – 70.00 Lacs 600
Axis Finance Home Loan 9.5% – 11% 0.5% – 1% 30.00 Lacs – 10.00 cr 650
Fullerton (Grahshakti Home Loan) 10.5% – 16.5% 1% – 1.5% 10.00 Lacs – 75.00 Lacs 650
Hero Housing Home Loan 10% – 11% 0.5% – 1% 20.00 Lacs – 5.00 cr 650
India Shelter Home Loan 13% – 20% 1% – 2% 5.00 Lacs – 50.00 Lacs 500
Shubham Housing Finance Home Loan 10.5% – 14.75% 1.5% – 2% 5.00 Lacs – 50.00 Lacs 450
DMI Housing Home Loan 11.5% – 14% 1% – 1.5% 5.00 Lacs – 75.00 Lacs 650
Vastu Housing Finance Home Loan 10% – 15% 1% – 2% 5.00 Lacs – 3.00 cr 650

 

Can Anyone Claim both an HRA and a Home Loan?

Yes, there are tax breaks available to people who pay interest on a house loan in addition to receiving a House Rent Allowance (HRA) from their companies. Certain restrictions do, however, exist, such as the inability to buy another piece of property in the same city as the HRA.

Does Taking Out a Second Home Loan Offer Any Tax Benefits?

Yes, people who take out a second house loan can also benefit from tax advantages. Similar to the initial house loan, deductions are allowed for principal repayments under Section 80C and interest payable under Section 24, subject to specific criteria. 

Know Everything about Mortgage Interest Deductions

 

The deduction of mortgage interest from taxable income is one of the biggest tax advantages of becoming a homeowner. If you itemize your deductibles on your tax return, you, as a house owner, can deduct the interest you pay on your housing loan up to a specific amount. In the initial phases of your mortgage, when interest involves the biggest portion of your payments, this deduction can save you a lot of money on taxes.

 

Purchasing a home is a wise financial decision, not just a fantasy. The goal of this in-depth guide is to arm self-employed and salaried homebuyers with the information they need to successfully negotiate the complex world of home loan tax benefits.

Make the most of your tax advantages and build the house of your dreams.

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