How to Save Income Tax & Established Property from House Loan ?

Nowadays, most of the home buyers if you ask the second reason why they are buying new house is to show the investment while submitting the tax proofs. In fact, that is not the good way to see the investment, if you buy house only for the tax reduction, then you need to spend time on learning about the savings and investments. Better to discuss with financial consultant. We are not going to discuss on that here, this section summarizes the list posts that talks about the tax planning using the home loans. The following list of topics discuss on the investments on home loans and sections 80c and 24b on saving the tax exemptions.

Section 80c: Income Tax Policies on Principal Repayment.
Under this section maximum of Rs.100000(one lac) can be exempted from the Income Tax on repayment of principal on home loans.

Section 24b: Income Tax Policies on Interest Repayment
Under this section maximum of Rs.150000(1.5 lac) can be declared as the interest payable on the Home Loans. As we have shown the examples, here as well the rule is same. You can exempt maximum of Rs.150000.

Tax Benefits on Home Improvement Loans:

1. The good thing is you can claim the tax benefits for home improvements loan as like the home loans.
2. There is an income tax benefit on the interest component of the home improvement loan up to Rs 30,000 under Section 24 of the Income Tax Act, if it is self occupied.
3. In case of the property is rented out, there is no limit on the tax deduction. For example if you have to pay the total interest on the home improvements loan as Rs.195000. The total income from the rented house is Rs.100000. Then you will be eligible for the tax deduction of Rs.95000 (195000-100000). Note that this exemption is not coming under the allowed limit of Rs.150000 for home loans interest. That is the separate component on income tax act.
   

Posted in: Home Loan and Tax Benefit,House Rent Allowance,Loan Facility