Did you know that home loan borrowers can get tax benefits? As per the Income Tax Act of 1961, the principal amount and interest components paid towards a home loan are eligible for tax deductions. The maximum tax deduction that you can get for the principal component is up to Rs 1.5 lakh under Section 80C. When it comes to the interest payments, the maximum tax deduction can go up to Rs 2 lakh, as per Section 24 B.
Now, to understand the exact amount you are saving through home loan tax benefits, it is advisable to make use of a tax benefit calculator. This is a tool that makes it very easy to know your home loan’s tax savings. If you have not heard of this calculator before, read on to learn more:
What Does A Home Loan Tax Benefit Calculator Help With?
A home loan tax benefit calculator helps in calculating a home loan borrower’s tax savings and net liability as per their total deductions, gross annual income, as well as the payments they make towards the housing loan. Now, this calculator is an online tool that takes into consideration various factors to calculate the tax benefits of a home loan. These factors include the principal amount of the home loan, your annual income, home loan interest rate, home loan EMIs, any existing tax implications, etc.
How to Use a Home Loan Tax Benefit Calculator?
All that you need to provide while using a home loan tax saving calculator are details regarding the home loan, the tenure in which the loan is being repaid, as well as the interest rate of the loan. Once these details have been filled up, the calculator will provide results regarding the tax amount to be paid after deductions, the tax amount you would have to pay without the home loan tax benefits, as well as the total amount you are saving after the tax deductions. This makes using a tax saving calculator a simple and effective way of finding out the tax deductions of your loan.
Additional Tax Benefits (Joint Home Loan)
If you are looking to maximise your home loan tax benefits, opting for a joint loan rather than being an individual borrower can be a better alternative. This is because, in the case of a joint loan, both the co-applicants can claim tax deductions under Section 80C and Section 24B. This means that the total tax deduction that can be claimed on the principal amount is Rs 3 lakh (Rs 1.5 lakh each), and the total tax deduction on the interest component is Rs 4 lakh (Rs 2 lakh each). Do keep in mind that to enjoy these tax benefits, you are required to apply for home loan with a co-applicant who is also a co-owner of the house.