Owning a home in India comes with several tax benefits that can significantly reduce the financial burden on homeowners. The Indian Income Tax Act provides various deductions and exemptions to encourage homeownership and alleviate the costs associated with home loans and property maintenance.
Homeowners can claim a deduction on the interest paid on home loans up to INR 2 lakh per annum for a self-occupied property. If the property is rented out, the entire interest paid can be deducted from the rental income.
The principal repayment of a home loan is eligible for deduction under Section 80C up to INR 1.5 lakh per annum. This deduction includes other eligible investments like PPF, NSC, and life insurance premiums.
The stamp duty and registration charges paid during the property purchase are also eligible for deduction under Section 80C, subject to the overall limit of INR 1.5 lakh.
First-time homebuyers can avail of an additional deduction of up to INR 1.5 lakh on the interest paid on home loans under Section 80EEA, provided the loan is sanctioned between April 1, 2019, and March 31, 2022, and the property value does not exceed INR 45 lakh.
Rental income from residential property is taxable under the head "Income from House Property". The gross annual value (GAV) of the property, which is the higher of the actual rent received or the reasonable expected rent, is considered for taxation.
Taxable Rental Income = GAV - Standard Deduction - Interest on Home Loan.
These tax benefits and rules make homeownership and property investment more financially manageable for individuals in India.
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