Tax Benefits in Home Loan
A person who is on rent should evaluate the idea of buying a home by using home loan from banks and other financial institutions.
This idea saves lot of taxes and builds an asset. The early one starts during his job tenure the better it is.
Under Section 24(d) of Income Tax, the home loan borrower gets the deduction of interest payable on the home loan is up to a maximum of Rs. 1,50,000.
Under Section 80(c) of Income Tax, the home loan borrower gets the eligible for tax deduction up to a maximum limit of Rs. 1,00,000 for Principal amount for the repayment of loan along with other savings & investments.
Second Home Loan Tax Benefits
In case of a home loan taken for a self occupied property, the principal amount repaid up to 1 lakh qualifies for deduction under Section 80C; while up to 1.5 lakhs of interest paid is tax-deductible under Section 24. This benefit gets reduced for second house. For the second house only the interest payment is eligible for deduction but there is no cap here as 1.5 lakhs. This means that if you are paying 3 lakhs as the interest entire amount is eligible for tax deduction subject to a formula prescribed.
In case of second house if the house is yet to be constructed, 20% of the total interest paid during the pre-construction period is also allowed as tax deduction. There is a limit however here which means that this benefit on pre –construction house is available for five years.