A mortgage loan is a secured loan provided by banks or financial institutions to purchase a house property. This loan helps people fulfill their dream of buying a home. However, what most people do not realize is that there are several tax benefits that come with mortgage loans in India.
Here Are Four Ways to Unravel the Tax Benefits on Mortgage Loans in India:
1. Tax Benefits on Interest Payment:
Under Section 24 of the Income Tax Act, homeowners can claim a deduction of up to Rs. 2 lakh for the interest paid on home loans. This is applicable for self-occupied homes and the deduction is allowed only if the house property is completed within five years from the end of the financial year in which the loan was taken. For example, if the loan was taken in the year 2020-21, the house property must be completed by 31st March 2026.
2. Tax Benefits on Principal Repayment:
Under Section 80C of the Income Tax Act, homeowners can claim a deduction of up to Rs. 1.5 lakh for the principal amount repaid on home loans. This deduction is allowed for both self-occupied and rented out homes. However, the home loan must be taken for the purpose of purchasing or constructing a house property. Additionally, the deduction is allowed only if the house property is not sold within five years from the end of the financial year in which the possession was taken.
3. Tax Benefits on Joint Home Loan:
If the home loan is taken jointly by a couple, they can claim mortgage loan tax benefits individually for the interest paid and the principal repaid on the loan. This means that both partners can claim a deduction of up to Rs. 2 lakh each for the interest paid on the home loan and up to Rs. 1.5 lakh each for the principal repayment.
4. Tax Benefits on Stamp Duty and Registration Charges:
Homeowners can claim a deduction of up to Rs. 1.5 lakh for the amount paid towards stamp duty and registration charges under Section 80C of the Income Tax Act. This deduction is allowed for both self-occupied and rented out homes. However, the deduction is allowed only in the year in which the amount was paid.
In conclusion, apart from helping you fulfill your dream of owning a home, a mortgage loan provides several tax benefits in India. However, it is important to note that these tax benefits are subject to certain conditions and have certain limitations. Therefore, it is important to consult a tax expert or financial advisor to get a better understanding of the tax benefits on mortgage loans.
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