A Look At Tax Incentives To Home Loan Borrowers Which Taxpayers Can Claim?

Home Loan Borrowers are provided few of the tax incentives as either tax break or exemption for serving such a large ticket-size loan. After the Union Budget announcement on February 1, 2017, few of the changes were effected, knowing which come in handy for them at the time of making a claim while filing tax return. Barring taxpayers who deal in real estate, all taxpayers will have a maximum exemption of Rs. 2 lakh for the interest paid on capital borrowed to purchase a home or for any other investment. The earlier provisioms allowed such interest paid to be set off against the rental income without any prescribed limit.Advertisement As long as the interest is payable on the housing loan, taxpayer is allowed a tax advantage in lieu of it as a deduction. The said deduction is allowable also in a condition when the borrower defaults on EMI payment. There can be a scenario where you just are servicing the debt of the loan but are not the owner of the property, (For you to qualify as the owner of the premises, you need to contribute towards the cost of the house in terms of financial consideration) in such a case you cannot claim the tax holiday. The section 80EE has been re-introduced as a aid to homebuyers to provide a deduction to the extent of Rs. 50,000. The tax-relief as per the section is available only to new home buyers who have taken a home loan of not over 35 lakh and whose property values less than or equal to Rs. 50 lakh. Also, the financing of such loan should have been effected in the previous FY i.e. April 1st, 2016 to March 31, 2017. For qualifying as a long term capital gains asset, the Union Budget for the year FY 2017-2018 has reduced the holding period to two years time. Also any amount paid as stamp duty or registration charges can be claimed as a deduction. Income Tax also provides for any amount paid as interest to relatives or institutions to be claimed as deductions In case of property sale in five years time from the date of home loan grant, the repayment benefit realized on principal payment gets reversed. Any deduction claimed shall then be added as income for the year in which property sale gets materialized. Principal amount on home loan is eligible for deduction u/s 80C to the maximum amount of Rs. 1.5 lakh.