One of the most important aspects of a person’s life is purchasing or building his or her own home. Nowadays, some people build houses to meet their own needs, while others purchase flats or houses from builders. In both cases, the majority of people obtain a home loan. In such a situation, you should be aware that having a home loan provides you with a variety of tax benefits.
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You are entitled to tax benefits on home loans under various sections of the Income Tax Act, which you must take advantage of. Section 80 EEA allows you to claim a tax benefit of Rs 1.5 lakh on home loan interest payments. The benefits under Section 80 EEA are in addition to the Rs 2 lakh tax exemption provided by Section 24(b). Benefits available under 80 EEA are available only under the Pradhan Mantri Awas Yojana CLSS Scheme.
Criteria for getting tax benefits
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The above tax benefits are only available if you choose the old tax system. The benefit is not available under the new tax system.
According to the Income Tax Act, you can get tax breaks on home loans under these categories.
Section 24(b) provides a deduction for interest. You can deduct up to Rs 2 lakh in annual home loan interest from your taxes. However, this deduction applies only to self-occupied properties. There is no limit on non-self-occupied property.
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Section 80C allows a homebuyer to deduct the principal amount. One can benefit from an annual tax deduction of Rs 1.5 lakh on loan principal repayment.
Section 80 EEA provides a deduction for additional interest. You can deduct up to Rs 1.5 lakh annually on affordable home loan interest.
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Section 80 EE: This section allows first-time home buyers to take advantage of tax breaks. They can deduct up to Rs 50,000 in interest each year.
