What are the tax benefits on a home loan section 24 for FY 2023–24?
Tax benefits you must consider while taking a home loan!
Purchasing a home involves a huge financial investment that requires adequate financial planning. However with careful planning, one can avail several redemptions while making the most of the benefits offered by the government and loan sanctioning authorities to save on their loan amount.
Here’s a quick understanding of the available tax benefits on home loans.
A person applying for a home loan is eligible to apply for exemptions under Section 24b, Section 80C and Section 80EEA with exemptions totalling up to ₹5 lakh.
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What are the tax benefits on a home loan section 24 for FY 2023–24?
Section 24(b) offers income tax rebate on home loans but only on the interest part of the loan. This rebate is also applicable if you have taken a loan for home construction or renovation. Here it is important to note that the property must be used for self-occupation or rental purposes only. The deduction is calculated on the pre-payment charges and processing charges you pay to your lender.
If you have rented out the purchased property, you can claim a full interest payment deduction. However, if you have occupied the property, you can claim deductions only up to Rs. 2 lakhs per financial year.
One must note that this benefit is valid on the condition that the construction of the project is completed within a specified time frame.
How much tax can you save?
The amount of tax you can save on a home loan depends on factors such as the loan amount, interest rate, and individual tax slab. Generally, borrowers can avail of deductions of up to Rs. 2 lakh on the interest paid under Section 24 if they have occupied it.
Under the Income Tax Act, a home buyer can claim deductions under both these sections at the same time which enables one to maximise their benefits. While Section 24 allows deductions on interest payments, Section 80EE offers additional deductions specifically for first-time homebuyers meeting certain conditions.
Once you have a clear understanding of the deductions you are eligible for, you are equipped to make a prudent decision concerning your next home purchase. Financing your dream home is easier when you are aware of the applicable charges while purchasing your home.
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