If you have taken a home loan, you may be eligible for deduction under section 80C and 24(b). While the principle you repay on the home loan is eligible for deduction under section 80C, homeowners can also avail tax deductions for up to a maximum of Rs. 2 lakhs on the interest paid against their home loan. Whether you reside in the residential property or leave it vacant, you are eligible to receive the amount mentioned above as tax deductions.
On the other hand, if you give out the property on rent, you can claim a deduction for the entire interest on the home loan. However, your deduction on the home loan interest repayment; however, can only be up to Rs. 30,000 instead of the higher limit of Rs. 2 lakhs, if both the following conditions are fulfilled:
A) The home loan is taken on or after the 1st of April 1999
B) The purchase or construction of the property doesn’t complete within 5 years after the financial year in which, the loan was availed
Tax Benefits on Home Loan Repayments for Joint Owners
If you have availed a home loan and are joint owners of a self-occupied house property with your spouse, you may claim a tax deduction of up to Rs. 2 lakhs each, on interest on the home loan. Also, you can each claim a deduction on principal repayments, registration charges and stamp duty, as joint owners, up to a maximum of Rs. 1.5 lakhs under Section 80C.
Moreover, these deductions may also be claimed in the same ratio as that of the share of ownership in the property. That said, if you have taken a home loan jointly but aren’t a co-owner of the property, you are not eligible to claim the tax deductions.
It’s also important to note that the tax deductions on both home loan interest and principal repayment under section 24B and 80C respectively, can only be claimed after the construction of the property is completed.