Income Tax benefits for first-time homebuyers | Fusion - WeRIndia

Many people, especially salaried employees, prefer to buy a residential property with a home loan. You have to pay EMI on the home loan. But, you can have income tax benefits when you buy a home with a home loan.

Income Tax Act offers many benefits to homebuyers. If you are a first-time homebuyer, you can claim tax benefits up to ₹5 lakhs under various sections of the Income Tax Act. But, you must be aware of these sections.

First-time homebuyers can claim income tax benefits under three sections of the income tax act. These are Section 80C, Section 24 and Section 80EEA.

Under Section 80C of the IT Act, first-time homebuyers can claim a tax benefit of up to ₹1.5 lakhs paid for home loan principal and Stamp Duty. However, they should not sell the property within 5 years of possession. If the property is sold within five years, the tax benefits claimed under section 80C are reversed. The amount is taxable in the year of sale. The property should not be sold within three years of acquisition to avoid short-term capital gains.

Under Section 24, first-time homebuyers can claim a tax exemption of up to ₹2 lakhs towards home loan interest payment. But the taxpayer or any of their family members should have to reside in that house. If the property is let out, then there is no maximum limit for the amount. That means you can even claim more than ₹2 lakhs toward interest payment on the loan if you actually incur.

Under Section 80EEA, first-time homebuyers can claim additional tax benefit of up to ₹1.5 lakhs towards home loan interest payment. But, the property value should be less than ₹45 lakhs. The home loan approval/sanction date should be between 1st April 2019 and 31st March 2022.

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