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How to Declare Home Loan in Income Tax: A Step-By-Step Guide

How to Declare Home Loan in Income Tax: A Step-By-Step Guide

A home loan is a bridge that transforms the dream of homeownership into a reality. But while the benefits of a home loan are undeniable, understanding its implications on your income tax can be complicated. From understanding the tax benefits to decoding the various components of your home loan declaration, there are multiple aspects that you must consider.

In this blog, we’ll guide you through the different sections in the Income Tax Act that allow tax deductions on home loans and how to declare home loans in Income Tax Returns.

Tax benefits on home loan

Before understanding how to declare home loan interest in Income Tax returns, it is crucial to understand the different sections of the IT Act that allow you to claim tax benefits on home loans.

Sections of the Income Tax ActNature of tax benefitsDeduction limit
Section 80CDeduction on repayment of the principal amountUp to ₹ 1.5 lakhs
Section 24bDeduction on the interest provided that the construction or acquisition of the house completed within 5 yearsUp to ₹ 2 lakhs
Section 80EEAdditional deductions for loans taken to build the first property between April 2016 to March 2017, with a maximum loan amount of ₹ 35 lakhs and a maximum property value of ₹ 50 lakhsUp to ₹ 50,000
Section 80EEADeductions for interest payments and section 24bUp to ₹ 1.5 lakhs + ₹ 2 lakhs (under section 24b)

If you have taken a joint home loan, each borrower can claim a deduction of up to ₹ 2 lakhs on the loan interest under section 24b. Moreover, you can claim a deduction of up to ₹ 1.5 lakhs on the principal repayment amount for a joint home loan under section 80C. This section also allows a deduction of ₹ 1.5 lakhs on stamp duty and registration charges.

How to declare a house loan in ITR?

Here is a step-by-step guide on how to declare home loans in income tax:

Step 1: Ensure you have all your property ownership documents, certificates of construction and home loan approval with the interests and payments made, municipal taxes receipt and your identity proof.

Step 2: Submit the documents to your employer.

Step 3: Calculate the deductions you can claim on your home loan.

Step 4: Visit the official Income Tax website to complete the submission of your home loan tax.

After following all the mentioned steps, download your tax statement for verification.

In a nutshell

Home loans are a great way to fund your homeownership dreams. By understanding how to declare a home loan for income tax and arming yourself with knowledge, you not only enjoy the comforts of your home but also make the most of the financial advantages it brings.

But there’s another important factor that you must consider – securing a loan from a trusted lender.

At TATA Capital, we provide affordable home loans at the best interest rates in the market. You can also avail of business loans, wedding loans, travel loans, medical loans and more conveniently to streamline your financial needs.

FAQs

1. Do I need to declare my home loan while filing Income Tax Return?

Yes, you must declare your home loan while filing the Income Tax Return. You can follow the step-by-step guide to understand how to declare home loans in income tax.

2. Under which sections can I claim tax benefits on a home loan?

You can claim tax benefits on a home loan under sections 80C, 24b, 80EE and 80EEA.

3. Can I claim tax benefits on a second home loan?

Yes, you can claim tax benefits on a second home loan.

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