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₹1,57,588
Total Tax With Home Loan -
₹2,47,500
Total Tax Without Home Loan -
₹89,912
Total Tax Savings
Home Loan Tax Benefit Calculator
Home Loan Tax Benefit Calculator
Buying a home is almost everyone's dream and is also considered the most important financial goal. The sense of accomplishment and peace that comes with home ownership is priceless. Regardless of whether you buy or build a home, you will be making a large financial investment.
To encourage people to pursue their dream of owning a home, several sections of the Income Tax Act 1961 allow tax deductions for various components of buying or building a home, especially if a home loan is taken. If you're planning to buy a home soon, here's a quick guide to the tax benefits available.
How to Calculate Tax Benefits on Housing Loan?
- Enter Interest paid on home loan amount.
- Enter Principal paid on home loan amount.
- Enter your Gross annual income.
- Click on "Calculate"
- User can see the total tax saving with home loan
Tax benefits under Income Tax Act
Housing loan has two components- Interest payment and Principal payment. Please refer to the below table to understand how one can save on tax with a home loan.
| Income Tax Act | Tax exemption |
| Section 80C | Deduction up to ₹1.5 Lakhs on the Principal amount |
| Section 24(b) | Deduction up to ₹2 Lakhs on the Interest amount. |
| Section 80EE | Additional deduction of up to ₹50,000 on the interest component for first time home buyers |
Tax Deduction under Section 80C
Under this section, home loan borrowers are entitled to a deduction of up to ₹1.5 Lakhs on the principal amount if the conditions listed below are met
- The property should be fully built and occupied independently
- The borrower may not sell/transfer the property within 5 years of possession. Otherwise, any deduction claimed for those 5 years will be treated as income in the year the property is sold.
Tax Deduction under Section 24(b)
Below conditions are applicable for claiming home loan tax benefits under section 24 (b):
- Limit of ₹2 Lakhs is applicable if the property is self-occupied
- In case of Rented property, there is no such limit
- The borrower must have bought the property or completed the construction within 5 years of taking the loan.
Tax Deduction under Section 80EE
First-time home buyers can get an additional deduction of up to ₹50,000 on the Interest component, over and above the deduction of ₹2 Lakhs claimed in Section 24 (b), only if the following conditions are met:
- The borrower must not own any other house at the time of loan sanction
- The loan sanction date must have been between 1st April 2016 to 31st March 2017
- The value of the property should not exceed ₹50 Lakhs and the sanctioned loan amount should be ₹35 Lakhs or less.
Tax Deduction under Section 80EEA
The first-time home buyers can get an additional deduction of up to ₹1.5 Lakhs on interest payment over and above the deduction of ₹2 Lakhs claimed in Section 24 (b), only if the following conditions are met:
- The borrower must not own any other house at the time of loan sanction
- The loan sanction date must have been between 1st April 2019 to 31st March 2021
- The value of the property should not exceed ₹45 Lakhs
- The borrower should not be eligible to claim a deduction under 80EE
Benefits of Using a Home Loan Tax Exemption Calculator
Using a home loan tax exemption calculator can provide you with several advantages. Below are some of them:
- Calculate your savings utilising the Section 80C deduction.
- Section 80C allows you to save tax by choosing qualifying assets and expenses.
- Depending on your goals and level of risk tolerance, you can decide which investment under Section 80C to make.
- Get an idea of how much tax you will save and may invest in other assets.
- Being a digital tool, the calculator will give you error-free results instantly.
FAQs
IIFL Home Loans tax saving calculator helps in calculating tax implications accurately. Using home loan tax benefit calculator, one can understand the tax savings on housing loan.
To claim tax deductions on a home loan, you can fill in home loan details such as interest and principal amount paid in the ITR or submit it to the HR department of your company. Post evaluation, they deduct the Tax at source on your income accordingly.
If you opt for a home loan with a co-borrower who also happens to be a co-owner, the potential for tax savings essentially doubles. Under section 80C and 24, both borrowers are eligible for tax credit on interest up to ₹2000.
Therefore, each of the borrowers can claim up to ₹3.5 Lakhs as annual tax benefit from the home loan.
You can claim Interest payment under section 24, provided you have received an interest certificate from them. Without a certificate, you would not be entitled to a deduction. The recipient of interest income who issues the certificate is obliged to pay from the interest income he receives. As far as principal repayments are concerned, they would not be eligible for tax benefits as only loans from notified institutions and banks are eligible for such deductions.
If you have taken out a home loan and are still living in a rented place, you will be entitled to the following benefits:
1. Tax benefit on repayment of principal according to section 80C
2. Tax benefits for the payment of interest according to section 24
3. House Rent Allowance (HRA)
You can only claim tax benefits from a home loan if your house is ready for occupancy in the given financial year. Once the construction of your house is complete, the HRA benefits will stop. If you have taken out a home loan, acquired a home, rented it out, and stayed in a rented accommodation, you will be eligible for all three of the above benefits. However, in this case, the rent received would be considered as your taxable income.
Disclaimer: The above calculator is only to enable the public to have quick and easy access to basic tax calculation and is subject to change in law and practices from time to time. The individuals are advised to get professional advice in exceptional circumstances
