What are the tax benefits of Home Loans ?
As the Indian real estate market makes an upward swing, and investors opt for housing finance or home loans, tax benefits obtained from them is a lucrative option. Customers availing of Home Loans can claim a certain portion of the interest and principal that they pay towards the loan installments for reducing tax liability. Resident Indians are eligible for certain tax benefits on principal and interest components of a loan under the Income Tax Act, 1961.
Buying a home can result in a big tax break every year, among other benefits. In terms of investments, purchasing a home is probably the biggest one you will ever make. Moreover, it can be the wisest, due partly to a number of tax advantages the government has instituted to encourage home ownership. These benefits can help reduce the cost of buying and owning a home and leave you with more money when it’s time to sell. The Denver Home Loan Tax Benefits Calculator although designed for Colorado it will work for any states in the USA
Taking a home loan serves two purposes. One, of course, is that you get to buy your own home and pay for it in easy instalments. The other is that you get several benefits under the Income Tax Act. And since these sops are what make a home loan different from other loan products, it makes sense to take a long, hard look at them.
Alarge number of people are buying houses in the city. Even as property prices skyrocket, they have a good reason to be happy. The tax benefits on home loans ease the burden of repayment. The equated monthly installment (EMI) payments made by a borrower has two components - the principal component and the interest component. During the initial years of the loan tenure, the EMIs would have a higher share of interest component. It would have a higher principal component only towards the end of the loan tenure.
Interest on home loan for acquisition and repairs:
Under the provisions of Section 24, a deduction of a maximum of Rs 1,50,000 every year is permissible in respect of interest on home loan if the house is self-occupied. A loss up to Rs 1,50,000 of interest can be adjusted against salary income or business income or income from other sources. If a person has taken a loan for repair of house or flat, a deduction of maximum amount of Rs 30,000 is permissible and that too within the said amount of Rs 1,50,000.
