Introduction
Our Indian government provide us with a lot of schemes and everything in order to provide a good life. Among many schemes provided, there is one specifically focusing on housing for all which is named as “Pradhan Mantri Awas Yojana”. This scheme aims that every Indian household must have a proper house to live in. Similarly, under Income Tax Act, many relaxations are provided to the Income Tax payers so that most of the people can also afford a house, of their own!
In this article, we will be focusing on the home loan tax benefits 2023 provided to home buyers. Availing of a home loan provides you with numerous deductions which you may claim and lesser your tax amount.
Owning a house was a dream for all, but now that dream can actually come true. Yes, you heard it right! Continue learning about the topic on home loan benefits and know how you can avail home loan benefits under income tax.
IT Deduction for interest paid on home loan
As per Section 24 (b) of the Income Tax Act, a deduction of Rs. 2 Lakh on the interest amount paid on home loan. This deduction is allowed in the case of self-occupied as well as vacant residential properties.
Moreover, this deduction is applicable on home loan taken on or after 01-04-1999 and for the properties whose acquisition or construction is completed within 5 years from the end of the financial year.
The deduction of Rs. 2 Lakh shall remain limited to Rs. 30,000 in the following cases, namely:-
- Where the home loan is taken before 01-04-1999 for buying or constructing of a house property.
- When the home loan is availed on or after 01-04-1999 for reconstructing, repairing or renewing a house property.
- If the construction of home loan which was taken on or after 01-04-1999 is not completed within five years.
This was a short brief on the first deduction under income taken to provide you with home loan tax benefits for the coming year 2023.
Deduction on principal repayment amount
The second home loan tax benefit 2023 is given under Section 80C of IT Act. Section 80C is the income tax section which grants a deduction of up to Rs. 1.5 Lakh on the amount paid as the principal repayment amount of the home loan. Additionally, a deduction for stamp duty and registration charges can also be claimed which stays limited to Rs. 1.5 Lakh. One must note, that this deduction is necessary to be granted only in the year these expenses are incurred.
Additional Deduction
As per Section 80EE of the Income Tax Act, maximum of Rs. 50,000 shall be offered to home buyers. To claim an additional deduction given under Section 80EE, here are some of the necessary conditions required to meet:-
- The home loan amount must be Rs. 35 Lakhs or less, and the property’s value should not exceed Rs. 50 Lakhs.
- The loan must be sanctioned between 1st April 2016 to 31st March 2017.
- On the date of sanctioning loan, the individual shall not own any other house i.e. he must be first-time buyer.
An additional deduction under Section 80EE is the third home loan tax benefit you can avail in 2023.
Deduction given under Section 80EEA
While, in order to promote housing for all, an additional deduction is introduced which gives a maximum of Rs. 1,50,000 deduction to homebuyers. Read some of the conditions necessary to be followed in order to claim a deduction under Section 80EEA.
- The stamp duty value of the property should not exceed Rs. 45 Lakh.
- The loan must be sanctioned between 1st April 2019 to 31st March 2022.
- Must not own any other house on the date of loan sanction.
Note:- If a home buyer avails of deduction under Section 80EE then he shall not be eligible to claim deduction given under Section 80EEA. Hence, we can conclude by saying that a home buyer can claim either of the two deductions given, namely deduction under Section 80EE or Section 80EEA.
IT Deductions on Home Loan 2023
The tax benefits on home loan under the applicable sections of the Income Tax Act are listed in the table given below:-
| Income Tax Deductions Applicable | Allowed Deduction |
| Section 24 | Rs. 2 Lakh per annum |
| Section 80C | Rs. 1.5 per annum |
| Section 80EE | Rs. 50,000 |
| Section 80EEA | Rs. 1,50,000 |
Frequently Asked Questions (FAQs) on Home Loan Benefits
- What is the benefit of a home loan in income tax?
If you get a home loan, you are eligible to claim several deductions under Section 24 and Section 80C of the Income Tax which you further help you to pay a lower tax. Obviously, a good option to save money is to buy a home loan. However, not every home loan shall allow Income tax deductions. There are some provisions that is necessary to be followed, only then deductions are permitted.
- How much tax will reduce if I take a home loan?
Well, depending on the category of deduction your tax will be reduced. As there are numerous deductions provided by the Income Tax Department. To mention a few, under Section 80EEA benefit of up to Rs. 1.5 Lakh is granted on the interest paid on home loan. Section 80EE allows deduction of up to Rs. 50,000. Section 24 provide deduction of maximum Rs. 2 Lakh.
- Who can get home loan tax deduction?
The income tax deductions on home loan are granted to the owners of the property. Also, the joint owners of the property can also claim home loan tax deductions.
- Can I apply for 2 home loans to claim home loan tax benefits?
Surely, one can avail home loan tax benefits on 2 homes as well.
- What is tax benefit?
The term “tax benefits” means the benefits that one can claim after paying a sum of money to the government.
Final Words
Thus, here we come to the end of the article “Home Loan Tax Benefits 2023”. Hope you have gained a piece of good knowledge about the income tax deduction allowed to home buyers in the coming year 2023. To get more of the detailed knowledge of the deductions for home loan, get in contact with our team of experts. We, at EAdvisors have a wide range of experts who will help you throughout the process. We provide free advices to our clients. So, consult EAdvisors and save your tax soon.
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