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EMI Calculator IFSC Code Blogs FAQsBlogs > House Property Loan Tax Reforms You Need To Know For FY 2020 21
House Property loans are a convenient option for those who want to save on income taxes and afford their dream house within a specific budget.
House owners who have taken loans to purchase homes up to Rs 45 lakh are now eligible to claim an additional tax deduction of Rs 1.5 lakh. This will be in addition to the Rs 2 lakh deduction which is available to house owners who brought affordable housing on loans borrowed up to March 31, 2020. This date is extended for one more year.
This decision has been taken by the Finance Ministry to ensure that more persons avail this benefit and incentivize the affordable housing. Keeping this factor in mind, Finance Minister Nirmala Sitharaman proposes during the presentation of Budget 2020 to extend the date of loan sanction for availing this additional deduction by one more year i.e. March 31,2021.
The additional deduction of Rs 1.5 lakh, over and above the existing Rs 2 lakh, is being provided under the Section 80EEA.
Eligibility criteria
The deduction under this section is available only to individuals. This deduction is not available to any other taxpayer. Thus, if you are a HUF, AOP, Partnership firm, a company, or any other kind of taxpayer, you cannot claim any benefit under this section.
Amount of deduction
A deduction for interest payments up to Rs 1,50,000 is available under Section 80EEA. This deduction is over and above the deduction of Rs 2 lakh for interest payments available under Section 24 of the Income Tax Act. Therefore, taxpayers can claim a total deduction of Rs 3.5L for interest on home loan, if they meet the conditions of section 80EEA.
Other conditions
Like Section 80EE, in order to claim deduction under Section 80EEA, you should not own any other house property on the date of the sanction of a loan.
How to claim Tax deductions?
Step 1
You need to submit your House Loan Interest Certificate to your employer for availing an income tax refund.
Step 2
We recommend you use an income tax calculator to calculate deductibles if you’re doing the ITR filing on your own.
Bottom Line
The real estate industry, which is facing a huge demand slowdown and sluggish housing sales, had sought extension of this additional deduction, but wanted the price cap of Rs 45 lakh to be enhanced.