Applying for a home loan requires meticulous planning. You must assess your current savings and financial resources to know the maximum amount you can afford to borrow so that the repayment does not become a burden. However, financial planning for home loans must not be limited to EMI calculations, but you must also consider the taxes involved. Taxation is an integral part of the home loan application process; you must check what are the tax benefits you can get and how you can maximize the savings.
As a responsible Indian citizen, you must diligently pay your taxes and file your income tax returns every year. Did you know that when you file your tax returns on the home loan interest, you are eligible to get a deduction of up to Rs 50,000?
But how can you show the interest on a housing loan in your income tax returns? The process is simple, it only means you must take one additional step while filing your income tax returns.
Home loan deductible under Section 80EE
If you are a first-time home loan seeker, you can leverage the tax benefits available under Section 80EE and list the same in your income tax filing. Under this section, you can get an additional deduction of Rs. 50,000 apart from the already applicable deduction of Rs. 2 lakhs guaranteed under Section 24 of the Indian Income Tax Act.
By filing your taxes, you can get an additional deduction on your home loan interest and much-needed savings on your annual tax liability. Thus, if you qualify for both the deduction, you can enjoy valuable savings up to Rs. 2.5 lakhs throughout the loan tenure.
To be eligible for this deduction, you must meet specific eligibility requirements
·The value of the property you wish to purchase must not be more than Rs. 50 lakhs.
·The maximum loan value must not be more than Rs. 35 lakhs.
·You must avail of the loan from a recognized and authorized financial organization like a bank or an NBFC (Non-banking Financial Company).
·The loan must be sanctioned between 1st April 2016 and 31st March 2017.
·You must not own any other property in any part of India.
·The property you purchase must be jointly owned with your spouse or you must be the sole owner.
How to apply for the home loan interest deduction under Section 80EE?
Now that you are aware of the deduction available under Section 80EE and its eligibility, it would help to understand how to apply for it. The process is simple.
·First and foremost, you must calculate the interest amount you owe the lender for a particular financial year.
·Claim the deduction up to Rs. 2 lakhs under Section 24 of the Indian Income Tax Act.
·If you meet the above requirements, claim an additional tax deduction of Rs. 50,000
If you are a self-employed professional, you can file the returns directly with the Income Tax department. However, if you are a salaried employee, make sure that you file your returns with your employer to avail the ITR benefits on your home loan. Also, if you have availed a home loan jointly with your spouse, both of you can claim the deductions separately while filing your individual returns.