Tax Savings

Home Loan Tax Benefit 2022: Know The Income Tax Benefits on House Loan


The need for housing in India has increased in recent years and it can be done by home loan.Lower mortgage rates, the demand for better housing, government measures, consumers looking to enhance their level of life, and other factors might all contribute to this trend. The government launched a programme named “housing for everyone” in 2012, to complete by 2022. However, because of the extensive Covid-19 epidemic, this lofty target has yet to be met.

Home loan tax benefits and their importance

Many look to the Union Budget yearly for more significant reforms and tax benefits. For as long as the government existed, it has been engaged in the real estate market. According to the Income Tax Act of 1961, consumers who take out housing loans are eligible for various tax credits and deductions. Last year, the government enacted further tax incentives for house loans and interest payments on home loans.

 These tax incentives will expire on March 31, 2022, but you may still take advantage of them until then. The Minister of Finance has proposed extending the deadline for housing loan tax incentives until March 31, 2024. Mortgages closing in 2022 will be eligible for these home loan tax benefits. The budget benefits the real estate business but also helps those looking to purchase a house.

First-time homeowners may deduct mortgage interest.

The home loan deduction will be available for interest and principal payments beginning in 2022. Mortgage interest may be deducted from taxable income under Sections 80C and 24(b) of the Income Tax Act.

People who take out house loans are provided with tax advantages under Section 80C of the Internal Revenue Code. You may deduct Rs 1.5 lakh from your income tax in 2022 for a housing loan. This deduction may be made once a year from the portion of each mortgage payment that goes toward principal reduction (EMI). However, if the principal amount paid in a single year is less than Rs. 1.5 lakh, only cash payments may be deducted.

All registration and stamp duty expenditures paid throughout a fiscal year may be repaid in one payment of the home loan. You may deduct these expenses from your taxable income under Section 80C, but you can only claim Rs. 1.5 lakh per year.

According to Section 80C of the Income Tax Act, a home loan deduction may be claimed even if the house is still under construction.

To qualify for this deduction, the property in issue must not be listed for sale until the end of the fifth fiscal year after the year it was purchased. If the taxpayer of the home loan sells the property during the first five years of ownership, any deductions claimed on the parcel before the sale are null and void. The amount deducted from the selling price is added to the taxpayer’s taxable income in the year of purchase.

Section 24 of the Internal Revenue Code provides tax advantages for homeowners who get mortgages.

According to Section 24 of the Internal Revenue Code, homeowners may deduct mortgage interest from their taxes.

You may deduct up to two lakh rupees from your monthly taxes to pay off the interest on a housing loan for properties that are still being constructed. However, if the interest paid is less than two lakh rupees, just the interest paid may be deducted.

Taxes paid to a municipal corporation by the owner in a particular year may be subtracted. This is true whether or not the deduction was divided into sections.

Some homeowners may reduce their tax bill by taking advantage of the advantages available when they rent out their primary residence. The yearly net value of a home loan may be deducted from taxable income at a rate of 30%. A home’s “net yearly value” is the amount left over after paying state and local taxes.

You may claim a 30% discount regardless of how much you spent. However, in addition to the standard deduction of 30%, homeowners may deduct mortgage interest as a home loan tax benefit.

Non-profits and educational institutions and assets utilised in a trade or company are not eligible for the standard deduction since they have no yearly net worth. Before the Section 24 benefits may be utilised, the building on the land in issue must be completed. This pre-construction contribution is divided into five equal instalments of home loan and Section 24 states that all of them are tax-deductible once the structure is completed. However, these write-offs only apply to mortgages made on or after April 1, 1999.

Section 80EE provides tax benefits for first-time homeowners.

You may deduct up to Rs. 50,000 in interest each year under Section 80EE of the Internal Revenue Code, which provides tax advantages for house loans.

  • This discount does not apply to residences valued at more than Rs. 45 lakhs.
  • To qualify for this tax advantage, the mortgage amount on your property must be at least Rs. 35 lakhs.
  • This price reduction applies to homes that are still under construction.
  • This promotion validates mortgages closed between April 1, 2016, and March 31, 2017.

The house must be the buyer’s first residence at the time the loan is granted.

People who take out home loans are eligible for tax breaks. The Union Budget for 2019 contains Section 80EEA tax benefits to stimulate the construction of low-cost housing solutions by Article 80 of the Energy Efficiency and Conservation Act. Homeowners with modest incomes might benefit from an additional tax cut on mortgage interest. This home loan tax benefit is for first-time homeowners whose income falls inside the “affordable housing” level. If you match the conditions, you might earn up to Rs. 1.5 lakh in interest.

You must fulfil the following qualifications to be eligible for Section 80EEA low-cost housing:

A joint owner’s mortgage interest may be deducted in its whole. Each co-owner may remove their portion of the mortgage interest. They should be making EMI payments for the deduction to be most beneficial for housing loans. Both applicants are eligible for up to Rs. 2 lakh in home loan interest deductions under Section 24. (b). If the principal payments exceed Rs. 1.5 lakh, you may claim a tax deduction of up to Rs. 30,000 under Section 80C.

Each applicant may deduct an additional Rs. 1.5 million from their taxable income if they were the first to purchase the property in issue and otherwise satisfy the Section 80EEA conditions. If both borrowers of home loans fulfil the requirements of Sections 24, 80C, and 80EEA, they will each be entitled to an Rs. 10 lakh (Rs. 5 lakhs) yearly tax advantage relating to their house loan. You must have a mortgage loan to qualify for this perk.

Summing up

Many individuals want to possess their own house. Many financial institutions offer a variety of home loans that may help make this goal a reality by providing cheap interest rates, a simple application procedure, and tax incentives. You’ll realise whether a loan is feasible for you and if it will aid in advancing your company’s ambitions. Instead of doing the arithmetic by hand, let technology do it for you. There are also more in-depth, educational articles on Piramal Finance.