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A payee can get tax benefits through home loan under two different Sections of Income Tax Act.
- Under Section 24- Deduction on interest on home loan for self-occupied property up to Rs 2 lakh.
- Under Section 80C- Deduction on repayment of principal amount on home loan up to Rs 1.5 lakh.
- U/s 80EE :- Deduction on interest on home loan up to Rs. 1 lakh ,the deduction can be availed who get the HBL Int after 01/04/2013 on or after.
Tax benefits under Section 24 and Section 80C and U/s 80EE: Mr. X is eligible to claim tax benefits under Section 80C for
the principal repayment of the home loan and under Section 24 for interest
components. He can claim deduction up toRs 1.5 lakh along with all other permissible
instruments like, life insurance premium, PPF, ELSS, NSC etc under Section 80 C
and up to Rs 2 lakh under
Section 24.
Another Rs. 1 Lakh
U/s 80EE as HBL Interest w.e.f. 01/04/2013.
Tax Benefits on Joint Home
Loan: One can avail tax
benefit on home loan up to Rs 1.5 lakh under
Section 80C and 2 lakh under Section 24. But if you go for a joint home loan
along with your spouse in the ratio of 50: 50, then both of you can claim these
benefits separately. So the combined limit will beRs 3 lakh under
Section 80C and 4 lakh under Section 24. This can reduce your overall cost of
loan for the family considerably.
Total deduction will be Rs
7 lakh and if
both spouses are in the highest tax slab, they will get a tax benefit of Rs
210000/- which is
just double compared to an individual home loan, although this provision may
vary from person to person.
Before going for a joint home loan, you should
mutually work out your ownership share if you wish to optimize the tax benefit.
That is, if you and your spouse own the house jointly in the ratio of 50:50,
both can claim deductions in equal proportion. Therefore, if your tax slabs are
different, you need to work out your ownership share in a manner that the
spouse in the higher tax bracket owns a bigger share.
Please note that it is essential to be co-owners to
be eligible for tax benefits. The co-ownership share also plays a role in
determining your deductions.
