Know the Income Tax Benefits for Home Buyers in 2021

Income Tax Benefits - Home Buyers - Taxscan

Affordable housing remained a key focus area, as Finance Minister (FM) Nirmala Sitharaman, on February 1, 2021, presented the Union Budget 2021-22 in the Lok Sabha, aiming to revive Asia’s third-largest economy, which has been grappling with the COVID-19 pandemic-induced difficulties.

Income Tax Benefit for First Time Home Buyers

If you are buying a home for the first time, you are entitled to get Income Tax benefits on home loan under three sections namely Section 80C, Section 24 and Section 80EEA of Income Tax Act.

With the help of these provisions of the Income Tax Act let you avail home loan benefit of Rs 5 lakh annually.

  1. Section 80C: Under this section you can avail the benefit upto Rs.1.5 Lakhs for Home Loan Principal and Stamp Duty on a condition that property should not be sold within 5 years of possession.
  2.  Section 24: Under this section you can avail the benefit upto Rs.2 Lakhs for Home Loan Principal and Stamp Duty on a condition that the Income Tax assessee or any family member should be living in that house. Full interest can be claimed if house is on rent
  3. Section 80EEA: Under this section you can avail the benefit upto Rs.1.5 Lakhs on Home Loan interest on a conditions that assessee should not own any residential property till sanction of loan and should not be claiming any amount under income tax section 80EE and loan should be borrowed from Financial Institution only.

Tax benefits for second-time homeowner               

If you already own a property and wish to buy another then tax benefits under 80EEA cannot be claimed. You can claim benefits under 80C (plus against stamp duty paid in first year) and under Section 24. However, if the purpose of home is investment and you want to lease it on rent, in that case you can claim the full amount of interest component in section 24.

Tax benefits availed by women while investing in house

Generally, the income tax laws do not provide for the specific benefits in case a woman invests in a house. However, some state governments have given 1%-2% benefit of stamp duty if a woman is the owner of a house.

For Example, in Rajasthan, if you buy a house of amount Rs 40 Lakhs then in general case the stamp duty (including other charges) is 8.8% which is Rs 3,52,000, but if any a female member of the family buys this house then she has to pay 7.5% stamp duty, which is Rs 3,00,000. So, there is a one-time saving of Rs 52,000 if a woman buys the same house.

Tax benefits for husband-wife or joint purchase

If both husband and wife purchase a house jointly, the income tax benefit rules remain the same in that case, however, both husband and wife can claim tax benefits in their individual files. Maximum deductions benefits cannot cross the actual amount paid, i.e. both husband and wife cannot take benefit of the same payment.

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