If you’ve taken a home loan and acquired possession of your flat in March 2024, you’re eligible for income tax benefits related to interest paid and principal amount repaid, considering it’s your second house. Here’s a breakdown of the key points for Home Loan Tax Benefits:
Availability of Home Loan Tax Benefits:
- Tax benefits in respect of the home loan are available from the financial year in which you obtained possession of the house, i.e., financial year 2023-2024. The benefit for the entire year is applicable even if possession was taken on the last day of the financial year.
Treatment of Second House:
- Since the second house will be used by your parents, it will be treated as self-occupied for income tax purposes. Note that tax laws allow a maximum of two houses to be treated as self-occupied.
Interest Paid and Principal Repayment:
- For interest paid before the financial year 2023-2024, you can claim it in 5 equal annual installments beginning from the year of possession, along with the current year’s interest. This applies within the limits depending on whether the house is self-occupied or let out.
- If you’ve taken a home loan for both the first and second houses, the aggregate of ₹2 lakh of interest can be claimed under Section 24(b) for both self-occupied houses combined.
- Concerning the deduction of principal repayment under Section 80C, you can claim it within the overall limit of ₹1.50 lakh, along with other eligible items for repayment of home loan principal, for any number of home loans.
Tax Regime Consideration:
- Tax benefits for interest on home loans and principal repayment are available only if you opt for the old tax regime and are not applicable under the new tax regime.
Understanding the intricacies of tax benefits related to your home loan for the second house is crucial for maximizing your savings and complying with tax regulations. Ensure you take advantage of available deductions while adhering to the prescribed limits and tax regime requirements.