Best tax saving options for homebuyers – Home loan tax benefit 2022

“My home.”

These 2 simple words carry a lot of emotion, responsibility, and pride. That is why owning a home is one of the biggest milestones in most people’s lives. After all, who doesn’t want to stay in a place they can always call their own?

Buying a home is a financially enormous step. There are many who spend their entire life’s earnings to purchase their dream house. It is no doubt a very expensive affair, which is why any kind of tax saving on a home loan is like a godsend. Thankfully, the Indian Government encourages property buyers by providing tax relief in different ways. Let’s take a closer look at them:

For first-time homebuyers

It is common knowledge that first-time buyers can enjoy some perks. If you are buying a plot or home for the first time, you will have the tax-saving benefit under Section 80EE of the IT Act. According to this act, homebuyers can claim up to INR 50,000.

There are also additional deductions that are applicable on properties below INR 50 lakh bought on a loan equal to or less than INR 35 lakh.

For joint loans

There are quite a few schemes that encourage the joint purchase of properties, especially if one of the co-owners is a woman. Section 80 C of the IT Act states that both owners can take advantage of tax deductions on the property separately. Each co-owner can avail of deductions worth INR 20 lakh on the interest and INR 1.5 lakh on the principal amount.

Exemptions on interest and principal amounts

As aforementioned, additional exemptions are available besides the basic deductions. To repay the principal amount, homebuyers can claim up to INR 1.5 lakh. The only caveat here is that you should be the owner of the said property for at least 5 years. If you sell it before that, the deductions will be reversed and you will have to pay them back in the subsequent tax filing.

GST benefits

If you invest in affordable housing, you will be able to avail of subsidized GST rates. This option of tax saving on a home loan is suitable for low and medium-income groups and the economically weaker sections of society. The concessional GST is 8%.

Furthermore, there’s an interest subsidy for these groups under the Credit-Linked Subsidy Scheme.

Exemptions on stamp duty

This home loan tax benefit in 2022 may not seem like a big deal but the savings add up. According to this exemption rule, deductions on legal charges are possible. You can avail up to INR 1.5 lakh provided the property you are purchasing is for your use (not commercial) and it is ready to occupy at the time of purchase.

Women buyers in some states get a higher exemption percentage, supporting them in their quest to own property.

Conclusion

Buying property as an investment is extremely popular in India and through multiple schemes, the Government of India is making it more feasible. Make sure you go through all the options available and choose the relevant ones. Tax saving on a home loan will ease your financial burden and allow you to focus on other aspects of buying a home. All the best!

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