Claim Big Savings: Home Loan Tax Benefits Explained for ITR Filing

Buying a home is a significant milestone—and with it comes not only the pride of ownership but also a range of tax benefits. When it comes to filing your Income Tax Return (ITR) in India, claiming deductions on your home loan can lead to substantial savings.

In this blog, we break down everything you need to know about home loan deductions under the Income Tax Act, 1961.

1. Key Sections for Home Loan Deductions

✅ Section 80C – Principal Repayment

You can claim a deduction of up to ₹1.5 lakh per year on the principal repayment of your home loan under Section 80C.

• Eligibility: Property must not be sold within 5 years of possession.
• Includes: Stamp duty and registration charges (in the year of purchase only).
• Applies to: Both individual and joint owners (each can claim up to ₹1.5 lakh if co-borrowers).

✅ Section 24(b) – Interest on Home Loan

You can claim up to ₹2 lakh per year on the interest paid on your home loan under Section 24(b).

• Condition: Construction must be completed within 5 years from the end of the financial year in which the loan was taken.
• Pre-construction interest: Can also be claimed in 5 equal installments from the year of completion.

✅ Section 80EE – Additional Deduction for First-Time Homebuyers

An additional ₹50,000 deduction is available if you satisfy these conditions:

• Loan taken between 1st April 2016 and 31st March 2017.
• Loan amount does not exceed ₹35 lakh and property value is under ₹50 lakh.
• You must be a first-time homebuyer.

✅ Section 80EEA – For Affordable Housing (Extended Benefit)

If you missed out on Section 80EE, you might be eligible for ₹1.5 lakh additional deduction under Section 80EEA.

• Loan must be sanctioned between 1st April 2019 and 31st March 2022.
• Stamp duty value of property should not exceed ₹45 lakh.
• You should not own any residential house on the date of loan sanction.

2. Who Can Claim These Deductions?

• Salaried & self-employed individuals.
• Joint owners: Deductions can be claimed in proportion to their ownership and repayment contribution.
• Must have a valid loan certificate from the financial institution.

3. Documents Required While Filing ITR

• Home loan interest certificate from bank/NBFC.
• Possession certificate or completion certificate.
• Loan sanction letter.
• Property documents for ownership proof.
• Payment receipts (if applicable for registration charges).

4. Which ITR Form to Use for Home Loan Deduction?

• ITR-1 (Sahaj): If you have only one house property and it’s self-occupied.
• ITR-2: If you have multiple properties or let-out property.
• ITR-3/ITR-4: For business owners and professionals.

5. Tips to Maximize Home Loan Tax Benefits

• Opt for joint home loans with spouse or family to double benefits.
• Pay EMIs from both accounts to claim proportional deductions.
• Keep all documents and certificates ready during ITR filing.
• Ensure you don’t miss pre-construction interest if applicable.

Final Thoughts

Home loan deductions can ease your financial burden and reduce your tax liability significantly. However, it’s crucial to understand eligibility, sections, and limits to claim them correctly while filing your ITR.

If you're unsure or want expert assistance, it's always wise to consult a tax advisor or hire a professional ITR filing service like Global Taxman India Ltd to make the most of your eligible deductions.

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