BEST OPTION TO AVOID INCOME TAX WITH BENEFITS (HOME LOAN)

Yeah, you heard me correctly. To avoid or reduce annual income tax is being paid at the end of the each financial year by us, we have to invest our hard earned money in some insurance policies, mutual funds, Tax savings deposits, Govt bonds and etc (which have tax exemptions as per  income tax act). Off course, what we are doing is good investment but not getting much returns as we expected at all the times.

Even you are investing in various tax exemption schemes, you can save maximum upto 150000/- under section 80C and some more little amounts, which are not more than 50000/- under various other eligible sections. To complete this investment in time, we have to plan from starting of the Financial Year to avoid to save such a huge amount in a single instance. 

So, to avoid all these time burden / money burden plannings to invest, you can simply avail home loan at any bank with minimal interest rates to acquire a property. 

Housing loan  is not only save your income from tax but also it will create a fixed asset for you with higher returns more than other investment schemes. If you availed housing loan, principal portion of your repayment amount covers under section 80C of Income tax Act with maximum limit of Rs.1.50 Lacs (Rs.2.00 for senior citizen) per annum and Interest portion come under section 24 of Income Tax Act with maximum limit of Rs.2.00 Lacs (Rs.3.00 Lacs for senior citizen) and one more benefit Rs.50000 is there first time home buyers under section 80EE, over and above of section 24 and Section 80C. So, you can save total amount of Rs.4.00 Lacs of your hard earned money from tax every year for almost 10 to 15 Years. And also it doesn't require any pre-planning to do investment, because once you availed home loan, EMI will deduct from your account automatically (Bank will take care of your monthly investment).



Eligibility to claim under section 24:

1. The exemption limit of Rs.2.00 Lacs under this section is for first home buyers. if it is second home, then there is no such limit on exemption, which is let out.
2. Personal loan which is utilized for repairs or renovation or margin money for home, then you can claim the interest portion on personal loan is also under this section. (But Keep bills to prove your utilization of funds on home)
3. you can't claim this benefit when you buy home is in construction stage. (For construction stage homes, you can claim interest under section 24 (b) as pre-construction interest)

Eligibility to claim under section 80EE (For First time Buyers):

1. The value of property should be less than Rs.50 Lacs
2. The Home Loan amount should not be more than Rs.35 lacs.
3. This exemption can be claimed when your interest payment amount is more than Rs.2.00 Lacs.
4. This claim can be done by individual tax payers only. it is not for HUF, Trusts, Companies etc.
5. it is applicable on a per person basis, not on a property basis. For instance, You have purchased property jointly with your spouse, you both are paying the installments of loan then you both can individually claim this deduction.
6. You can rented out this property for which you want to claim this deduction.

Preconstruction interest:

When you buy an under-construction house, the interest pertaining to pre-construction period is allowed as deduction in five equal annual installments, commencing from the year in which the house property is acquired or constructed. Thus, total deduction available to the taxpayer under section 24(b) on account of interest will be 1/5th of interest pertaining to pre-construction period + Interest pertaining to the post construction period. 

For instance, if you availed home loan of Rs.25,00,000/-, you have to pay monthly EMI of Rs.21,696/- (approx). that means you can save approx 54000/- under section 80C & approx 2,00,000/- under section 24. So total amount of Rs.2.54 Lacs can be saved after getting property from tax.

And one more benefit is there for home loan borrowers from central government. i,e., Interest reimbursement upto 2.50 Lacs (approx) under PRIME MINISTER AWAS YOJANA scheme. For more details of this scheme click here.

Let me know your tax savings on your home loan and share your suggestion / queries in comments below.