Home loans are significant liabilities for borrowers. Recognising the immense financial strain that housing loan borrowers are under, the Indian Government offers attractive income tax benefits. Before availing of such a loan, you should consider the various sections under which tax deductions are available. A home loan tax benefit calculator can help in this regard.
Read on to know more about this particular calculator, as well as the tax-saving provisions for home loan borrowers.
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.
Refer to the table below to learn about the sections for various home loan tax deductions.
|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.
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:
Before using a home loan income tax benefit calculator, make sure you fulfil these conditions.
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:
Also Read- Tax Benefits On Second Home Loan
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:
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:
While using home loan tax benefit calculators, remember that those eligible for Section 80EEA benefit cannot claim Section 80EE deduction.
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.
Also read: 5 Benefits Of Taking A Joint Home Loan
Now that you know more about home loan tax benefits, here’s how you can use a calculator to compute the tax savings:
On the home loan tax benefit calculator page, enter the year of tax assessment.
Choose your category. Pick from male, female, senior and super senior citizens.
Enter your annual income.
In the appropriate field, enter the principal amount repaid during that fiscal.
Next, enter the interest amount you paid in that same year.
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.
With Section 80C and 24b of the ITA, you can maximise 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.
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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