Claiming Housing Loan Benefits in IncomeTax Rreturn
By Archit Gupta, ClearTax.in
Buying
a home is India’s favourite dream. Buying property also involves making the
most of tax benefits. Increasingly, homes are being bought by the young with
home loans.
If
you are unsure about how to maximise your tax benefits, especially if you are a
first-time homebuyer in 2015-16, here’s a quick guide.
When
can I start claiming tax benefits?
If
the construction of your property is not complete, you cannot claim any tax
benefits.
All tax benefits for a home loan can be claimed starting the
financial year in which the construction is complete.
So,
if the construction of your property was completed in August 2015, you can
claim interest paid for the entire 2015-16 in your tax return for that year.
What
are the tax benefits?
Tax
benefit on interest on home loan..
For a house property that is self-occupied,
deduction for interest paid can be claimed up to a maximum of Rs. 2 lakh in one
financial year.
A
self-occupied property means a property in which you live or your family lives,
or it may be lying vacant. Essentially, a property which is not rented is
self-occupied.
If
your property is rented, the entire interest paid by you can be claimed as a
deduction. There is no monetary ceiling.
Income Tax
benefit on principal repayment..!
Any repayment towards principal is eligible
for deduction under section 80C. Allowed within the Rs. 1.5 lakh limit of
Section 80C.
 |
| Archit Gupta, ClearTax.in |
You can also claim stamp duty and registration charges in the year
these were paid under section 80C.
Tax
benefit on pre-construction interest..!
If
you have paid EMIs before construction was complete, those can be claimed too.
One-fifth of the total pre-construction interest can be claimed each year,
starting the first year. However, maximum interest, including any
pre-construction interest, that can be claimed in case of a self-occupied
property is limited to Rs 2 lakh in one financial year.
Tax
benefits under section 80EE..!
Section 80EE was introduced to allow
additional tax benefits to new home buyers. However, this deduction is not
applicable for 2015-16.
How
to claim tax benefits in income tax return form?
If
you are salaried and want to claim interest deduction, you can file ITR-1. The
interest claimed has to be reported as a ‘loss’ under the head income from
house property.
This ‘loss’ can be knocked off against any income, salary
income or / interest income, or / the like. Tax has to be paid on the remaining
net income.
Do
note that in case you have foreign income or capital gains, or any carry
forward losses, you cannot file ITR-1, you may have to file ITR-2 or / ITR-2A.
Those
claiming interest from a rented property have to report their rental income
first.
A standard deduction of 30 per cent is allowed from rental income
towards maintenance and repairs, irrespective of the actual cost of these. The
entire interest can be claimed from this rental income net of this standard
deduction. Loss can be adjusted against other incomes.
What
are the documents that I need?
Interest
deduction is allowed from any loan that is used for purchasing or constructing
a house property.
Loan
may have been taken from a financial institution or an individual. However, the
construction of the property must be completed within three years, or else the
total deduction for interest shall be limited to Rs. 30,000.
Section
80C tax benefits on principal repayment, though, can only be claimed if loan
has been taken from a financial institution.
Your
lender (Bank, Housing Finance Companies) must provide you an interest certificate, which has details of EMI and
its break up between interest and principal.
You
must also have the date of completion of construction.
About the author
https://in.linkedin.com/in/architgupta
ClearTax HQ
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School Lane, Naraina Vihar,
New Delhi - 110 028
School Lane, Naraina Vihar,
New Delhi - 110 028
support@cleartax.in
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