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The Advantages of Obtaining a Home Loan in 2022

Buying a home is an expensive bet. However, obtaining a home loan to get one makes it easy. The demand for housing and housing loan in India has increased in recent years. This can be attributed to many factors such as lower interest rates, the need for better housing, government initiatives, etc. Last year the Government also implemented additional housing loan tax benefits on interest payments of home loans, for which the deadline was 31st March 2022. The deadline has been extended to 31st March 2024. These income tax benefits apply to home loan 2022.

Let us discuss how you stand to benefit when opting for a home loan in 2022.

Benefits of Procuring a Home Loan in 2022

  1. Low-Interest Rates

This is the best time to go for a housing loan. The prevailing rates are the lowest home loan interest rates in recent times. A lower interest rate means lower EMIs every month. The budget this year to has given a boost to homebuyers and the real estate industry.

  • Income Tax Benefits

The income tax benefits on home loans in 2022 are available on both interest payments and principal repayments. Home loan deduction in income tax can be availed under Section 80C and Section 24(b) of the Income Tax Act. Let us dive deeper to understand this better.

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  • Income Tax Benefits on Home Loans under Section 80C
  • You may claim a maximum of 1.5 lakh income tax benefit annually on a home loan 2022 on the principal repayment portion of the home loan’s EMI. If the actual principal is less than 1.5 lakh, then only the actual principal repayment is allowed as a deduction.
  • Deduction on registration and stamp duty charges can be claimed only once in the financial year in which these expenses were incurred. However, the total deduction that can be claimed under Section 80C, including these charges, cannot exceed Rs. 1.5 lakh in any year.
  • For an under-construction property, the home loan deduction in income tax under Section 80C. To claim this deduction, the property cannot be sold for five years from the end of the financial year in which the property was purchased.
  • Benefits under Section 24

Section 24 covers housing loan tax benefits for the interest portion of the home loan.

  • For houses under-construction, you may claim a tax benefit of up to 2 lakh annually on the interest paid. The deduction allowed is actual or 2 lakhs, whichever is less.
  • If the owner has paid municipal taxes in any year, the actual tax paid to the municipal corporation can be claimed as a deduction.
  • The deductions can offset the income from the house property for properties that are let out instead of being self-occupied. A standard home loan deduction in income tax of 30% of the net annual value is available.
  • This 30% standard deduction is irrespective of the actual expenses incurred.
  • No standard deduction for self-occupied properties or properties where the net annual value is nil.
  • Benefits of Section 24 can only be claimed when the construction of the property has been completed. If any interest on the home loan was paid during construction, it is called pre-construction interest. This pre-construction is divided into five equal installments, which can be claimed as a deduction under Section 24 after the competition of construction.
  • Benefits under Section 80EE

In 2019, the union budget introduced tax benefits to promote affordable housing opportunities through Section 80EEA. This provided an additional deduction on home loan interest for affordable housing. It is for first-time home buyers who fall in the category of ‘affordable housing’ and can claim Rs 1.5 lakh on interest paid.

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  • Benefits: Income Tax on Joint Property 

If the loan is taken jointly, each loan holder can claim a deduction in their tax returns for home loan interest up to Rs 2 lakh under Section 24(b) and principal repayment under Section 80C up to Rs 1.5 lakh. To be eligible for this deduction, they must also be co-owners of the property lent.

The combined tax benefit on the home loan that can be availed from Section 24, 80C, and 80EEA for two people amounts to Rs 10 lakh (Rs. 5 lakhs per person) every year, provided they meet all the requirements.

Attractive home loan interest rate 2022, a hassle-free process and tax benefits together make a home loan quite an alluring investment bet especially if you have been striving to get your own home.

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