Home Loan Income Tax Rebate India

Home Loan Income Tax Rebate India

Home Loan Income Tax Rebate is different for Principal payment and interest payment in India. Grossly the Home loan income tax rebate in India is divided into two things.

01) Tax Treatment for Principal of your Home Loan – Section 80C

02) Tax Treatment for Interest Payment – Section 24(b)

Thus, you can get tax benefits on to things – Principal and Interest.

Home Loan Tax Benefits for Principal – Section 80C:

The principal of your home loan comes under Section 80C Deductions up to the maximum amount of Rs.1 Lakh in any Financial year. So you can deduct up to Maximum Rs.1 lakh of your home loan principal under Section 80C.

However, only one problem is that, there are lots of things that come under Section 80C deductions. So after deducting several other things from Rs.1 lakh limit, very little remains towards the home loan principal payment.

There is only one condition here – principal repayment can be considered as a valid investment under section 80C only if it is made for a self occupied house. That is, you should be living in the house for which you are making the principal repayment.

Home Loan Tax Rebate for Interest – Section 24(b):

The interest that you pay for your home loan comes under Section 24(b). The maximum limit for the principal payment that is tax deductible under Section 24b is Rs.1.5 lakh per annum.

Thus, totally you can get a Maximum of Rs.2.5 lakh of Tax deductions for your home loan in any financial year under Section 80C (Up to Rs.1 Lakh) + Section 24b (Up to Rs.1.5 Lakh).

The best part is that there is no restriction of “self occupied property” for claiming the tax break on interest paid under sec 24. In fact, if you have rented out the house, and the rent you receive is more than Rs. 1.5 Lakhs per year, ALL interest paid (even if it is more than Rs. 1.5 Lakhs) is deductible from the rent received.

And remember, just like the principal repayment, there is no restriction on the number of houses for this benefit – the only restriction is the limit of Rs. 1.5 Lakhs.