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How to Calculate Tax Benefits on Your Home Loan For This Financial Year - Explained!
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If you are earning income over a threshold limit, you will need to pay taxes as per the Income Tax Act, 1961. Your taxability is determined according to your income and deductions available for you. Your taxes can be a significant part of your monthly income. Therefore, as a taxpayer, you must be aware of the benefits offered by the government to reduce your taxability. The government provides various tax benefits and exemptions on your taxable income based on your spending like investments, donations, etc. Repayment of your home loans is one such opportunity where you can claim deductions and save taxes. While there are ways to calculate your tax savings manually, a tax benefit calculator can make it easier for you.
Here is a guide on tax benefits available on home loans and how you can calculate it.
What are the tax benefits available on home loans?
If you avail a home loan, you can claim tax deductions on the amount paid for the repayment of the loan. These deductions are available separately for principal and interest amounts. You can claim the following deductions from your taxable income on your home loan repayment.
You can claim a tax deduction from your income on the amount paid for principal repayment up to Rs 1.5 lakhs under section 80C. However, to claim this deduction, you must not sell the property for five years. You can claim the deduction for the payment of stamp duty and registration charges under the same section. However, this deduction is also capped under a maximum amount of Rs 1.5 lakhs.
Similarly, you can claim a tax deduction on the repayment paid for the interest component of home loans up to Rs 2 lakh under section 24 (b) of the Income Tax Act, 1961.
How can you calculate your home loan tax benefits?
You can calculate your home loan tax benefits with a home loan tax benefit calculator. This calculator is available on Kotak Mahindra Bank’s website and other aggregators' websites. It is a computation tool that is available online for free. With a tax saving calculator, you can calculate the amount of tax you would save by repaying the home loan.
Following are the steps to use a home loan tax benefit calculator -
A tax benefit calculator can help you know the amount of tax you would save by repaying the home loan. It can thus help you make an informed decision while buying a home. Therefore, use a home loan tax benefit calculator before you apply for a home loan.
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