Tax Benefits Associated With Housing Loans

Electronic money institutions (elementary in monthly installments) consists of two parts - part of the interest and principal amount. Interest expense is allowable for a tax credit under section 24 (b) (restricted), while the principle repayments allowed a deduction under 80C.

Higher maximum tax credit

Maximum tax deduction for repayment of the principal component of housing loans should not exceed 80C R 1,00,000 points. It should be borne in mind that other investments / contributions are allowed as a deduction under 80C, and this limit is Rs. 1,00,000 for each subject together.

Housing loan interest deduction, the other side is allowed a maximum amount of Rs 1,50,000 in paragraph 24 (b). However, the acquisition or construction of house property shall be completed within 3 years from the year-end, which is a loan taken advantage of the interest otherwise allowable only up to Rs 30,000.

Furthermore, the above limit tax deductions u / s 24 (b) only for self-occupied house property. In this case, let, rental house or considered real estate, interest may be deducted without limitation.

Starting time tax benefit claims

Some say that the main component of the deduction under section 80C of the housing loan is allowed as soon as we begin to repay the home loan. Some say, the deduction is only allowed if the building is completed. The law is unclear on the issue, so the uncertainty remains.

Interest deduction on housing loans during the 24th § (b) is permitted only in or acquire assets at the end of the house. However, before the deduction of an acquisition or pre-construction period is allowed, but only after the acquisition or construction is completed. The allowed five equal annual installments. But even after including the above, the total deduction can not exceed Rs. 1,50,000 per year.

Source Home Loans

In contrast to the 24th § (b) section 80C does not allow the deduction of housing loans taken from friends and relatives. Claiming tax relief on the principal component of housing under section 80C, you should borrow only to the creditors as defined in this section. There is no such restriction in paragraph 24 (b) of the IT Act, claiming tax relief on home loan interest rate component.

The aim of housing loans - home purchase / construction vs.

Home Improvement Deduction section 80C of the main part of the home loan EMI is not allowed if the home loan borrowing for reconstruction, renovation or repair of house property. Put simply, section 80C tax credit can only buy or build a new home. In contrast, the interest deduction allowed under 24th § (b) is a loan taken for repairs, renovation or reconstruction of existing housing estate, but subject to the limit case of Rs 30.000 self-occupied house property. In the case of rented house property is allowed without any real interest in the ceiling.

Salary is based on - thanks to a cash basis vs base

Tax relief u / s 80C can be claimed if the actual payment. The deduction of interest u / s 24 (b), on the other hand, allowed accrual basis due. Put simply, unlike the main part of the claimed interest deduction even if you do not pay.

Limitation of real estate house for sale

Section 80C of the tax relief granted on the condition that the house property is not sold before the 5 year period. If you violate this deduction disappears, and the whole tax reduction claimed in previous years, partly 80C - the repayment of the principal elements of the home loan - must be regarded as income in the year in which to sell the property. However, the same does not apply to home loan interest deduction claimed under the 24th § (b).




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