Wondering does home loan comes under 80C? Home loans offer significant tax benefits to borrowers under various sections of the Income Tax Act, one of which is Section 80C. Section 80C allows taxpayers to claim deductions on various investments and expenses, including the principal repayment of a home loan. Scroll down to understand how this works can help maximise your tax savings.
Does Home Loan Interest Comes Under 80C?
Section 80C of the Income Tax Act permits a deduction of up to Rs 1.5 lakhs per financial year on the repayment of the principal amount of a home loan. This deduction is part of the overall limit of Rs 1.5 lakhs available under Section 80C, which includes other eligible investments and expenses such as Provident Fund contributions, life insurance premiums, and children's tuition fees.
Conditions for Claiming the DeductionCompletion of Construction: The home loan principal repayment deduction under Section 80C can only be claimed after the construction of the property is complete. Deductions are not available for under-construction properties.
Self-Occupied or Rented Property: The property can be either self-occupied or rented out. The key requirement is that the loan must be taken for the purchase or construction of a new house or for repairs, renewal, or reconstruction.
Holding Period: The property must not be sold within five years of possession. If the property is sold before five years, the deductions claimed will be added back to the income in the year of sale.
Apart from Section 80C, home loan borrowers can also claim deductions under Section 24(b) for interest paid on the home loan, up to ₹2 lakhs per year for a self-occupied property. For a rented property, there is no upper limit for the deduction of interest paid.
Home loan principal repayments do qualify for deductions under Section 80C of the Income Tax Act, allowing taxpayers to reduce their taxable income by up to ₹1.5 lakhs annually. By understanding these provisions, borrowers can effectively manage their finances and optimize their tax benefits.
Combining deductions under Sections 80C and 24(b) can significantly reduce the overall tax liability, making home loans a tax-efficient borrowing option. Your query on does home loan comes under 80C should be solved.
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Does Home Loan Comes Under 80C?
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2024-06-26T11:23:26+00:00 2024-06-28T21:30:15+00:00Comment
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