What Is Home Loan Tax Benefit Calculator: Tax Benefits On Home Loans
The Income Tax Act, of 1961 elaborates on how a borrower can avail of significant tax deductions when repaying a home loan. A home loan tax benefit calculator is an online tool that allows you to compute how much taxes you can save because of your housing loan. Keep in mind that you can claim tax deductions separately on principal repayment and interest payment within a financial year.
However, before learning how to operate such a home loan tax saving calculator, you must learn about the various provisions.
Various Tax Benefits for Home Loan Borrowers
Refer to the table below to learn about the sections for various home loan tax deductions.
| Section | Component | Maximum Limit |
| 80C | Principal repayment | Rs.1.5 lakh |
| 24b | Interest payment | Rs.2 lakh |
| 80EE | Interest payment | Rs.50000 |
| 80EEA | Interest payment | Rs.1.5 lakh |
However, not every borrower can claim benefits under all of these provisions. You must meet certain conditions to qualify for tax deductions under each section. Before using the home loan tax benefit calculator, make sure you know about these terms.
How to Calculate Home Loan Tax Benefit
Now that you know more about home loan tax benefits, here’s how you can use a calculator to compute the tax savings:
- Step 1: On the home loan tax benefit calculator page, enter the year of tax assessment.
- Step 2: Choose your category. Pick from male, female, senior and super senior citizens.
- Step 3: Enter your annual income.
- Step 4: In the appropriate field, enter the principal amount repaid during that fiscal.
- Step 5: Next, enter the interest amount you paid in that same year.
- Step 6: Click on calculate.
A housing loan tax benefit calculator can compute your tax savings instantly in this method. Apart from tax savings, you must also use an EMI calculator offered by Navi. Navi offers up to Rs. 10 crores as housing credit to eligible applicants. To know more, download the Navi app.
Home Loan EMI Calculator
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Terms and Conditions to Claim Section 80C Tax Benefits
Section 80C allows deduction based on the principal repayment amount of a home loan. You can also claim this deduction on the registration and stamp duty of the house, but only for one year. Here are the conditions to claim tax benefits under this section:
- You cannot sell the concerned property within 5 years of possession.
- You can claim deductions on stamp duty only in the assessment year when you pay such charges.
Before using a home loan income tax benefit calculator, make sure you fulfil these conditions.
Terms and Conditions to Claim Tax Benefits Under Section 24B
Section 24B of the Income Tax Act allows up to Rs.2 lakh tax deduction on home loan interest payments. However, to claim this benefit, you need to fulfil a few conditions as well. These are as follows:
- You must avail of the home loan for the construction or purchase of a property only.
- If you are constructing a property with housing credit, its construction must be complete within 5 years. The period of 5 years is calculated from the end of the financial year during which you availed such a loan. This condition pertains to a self-occupied property only.
- If construction remains incomplete after 5 years, you can claim a maximum of Rs. 30000 under Section 24b.
- No time limit pertains to the construction when claiming Section 24b deduction if the property is not self-occupied.
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Conditions to Claim Section 80EE
Section 80EE provides an additional provision to save taxes based on your home loan interest payments in a year. Those eligible can reduce their tax burden by up to Rs. 50000. Listed below are the conditions you must meet:
- Your home loan principal must not exceed Rs.35 lakh.
- The property you intend to purchase should not be priced in excess of Rs.50 lakh
- Section 80EE benefits are solely available to first-time homebuyers.
- To claim Section 80EE deductions, the date of home loan sanction should be between April 1, 2016, and March 31 2017.
If you do not meet any of the following conditions, you can still qualify for additional tax savings under Section 80EEA. Here are some terms to keep in mind:
- The stamp value of your chosen home should not exceed Rs.45 lakh.
- You must be a first-time homeowner.
- Your lender must sanction the home loan between April 1 2019, and March 31 2022.
While using home loan tax benefit calculators, remember that those eligible for Section 80EEA benefit cannot claim Section 80EE deduction.
Home Loan Tax Benefits for Senior Citizens
As per the Income Tax Act, taxpayers between the age of 60 and 80 are referred to as senior citizens. Additionally, any individual who is above the age of 80 is referred to as a super senior citizen. There are a range of benefits that senior and super senior citizens can avail while applying for a home loan:
- As per the Income Tax Act, those above the age of 75 are exempted from filing tax returns provided they are a citizen of India and a pension is their only source of income that they receive in their bank account.
- According to sections 80C and 24B of the Income Tax law, senior citizens are eligible for Rs.2 lakh and Rs.3 lakh deductions, respectively. However, to avail of these deductions, the loan amount must not be more than Rs.35 lakh and the value of the property must not cost more than Rs.50 lakh.
Home Loan Tax Benefits for Joint Home Loans
Opting for a home loan jointly with your partner or family member can be highly beneficial. Both borrowers are eligible for the Rs.2 lakh and Rs.1.5 lakh deductions under Sections 24B and 80C, respectively. Therefore, the collective tax savings would be double when compared to sole ownership. To find out how much you can save, use a joint home loan tax benefit calculator.
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Final Word
With Section 80C and 24B of the Income Tax Act, you can maximise your tax savings. A home loan repayment is a long-term commitment, and such reductions in liabilities can bolster a borrower’s finances. In this pursuit of saving on taxes, make sure to use a home loan tax benefit calculator. It ensures speedy and accurate calculations.
FAQs
Ans: You can claim tax benefits under Section 24b in case of a second home loan. Therefore, interest payments on the loan will result in tax savings. However, a second home loan does not allow you to claim tax benefits on the second loan’s principal repayment.
Ans: Section 80EE and Section 80EEA benefits are solely for first-time homebuyers. Therefore, additional tax savings on the interest component is impossible when buying your second house. For such buyers, the only way to claim tax deductions on interest payments is through provisions under Section 24b.
Ans: Section 24b does not provide any limitations when you pay interest on a property you do not self-occupy. Therefore, renting a purchased property can maximise your savings. The maximum tax deduction available under this section is Rs. 2 lakh in a year.
Ans: HRA allowance tax deductions are available to individuals who reside in a rented property. However, if such an individual decides to buy a property, he/she can claim HRA deductions and home loan tax benefits. To do so, the assessee must still live on rent after availing of a home loan.
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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