Home loans are one of the most convenient funding solutions that one can opt for to purchase a home. Besides high loan amount at an affordable interest rate, it also offers several tax benefits to borrowers that enable them to save a substantial amount each year irrespective of their income tax slab.
Some of the income tax exemptions that one can claim on home loan repayments include –
- Under section 80C of the Income Tax Act, one can claim a deduction of up to Rs.1.5 lakh on the principal component. Apart from that, they can also claim exemptions on stamp duty, registration, and the likes.
- Section 24 allows exemption of up to Rs.2 lakh on the interest part of the loan in case of a self-owned property. However, no limits have been specified for a rented property. Under this section, one can also avail exemptions on home loans for pre-construction period.
Such deductions can be claimed when filing an income tax return in the concerned financial year. Given the income tax slab applicable to your earnings, the deductions claimed can help reduce the total tax liability significantly.
If you are considering repayment of home loan through EPF, here are several pointers that you need to keep in mind. This includes –
- As per section 68-BD under the EPF scheme, employees can use up to 90% of their Provident Fund amount as down payment for house purchase or in paying off a home loan.
- The member must carry more than Rs.20,000 in his/her EPF account to avail the funds.
- Individuals should have been EPF account holders for a minimum of three years to avail this facility.
Nevertheless, Individuals should keep in mind that one can withdraw the amount from EPF account only once. So, to reduce the repayment strain, they can consider opting for financial institutions for home loans providing facilities such as pre-approved offers, nominal pre-payment and foreclosure charges, etc.
Read Also: Follow This Guide and Avail EPFO and Income Tax Benefits on Your Home Loan
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