ITR Filing: Is It Wise To Pay Home Loan EMI And Avoid Income Tax Outgo?

Speaking on Home Loan Tax Benefits; Ashish Narayan Agarwal, Founder and CEO, PropertyPistols.com said, “Income tax savings is an important driver in the purchase of real estate. However, it would be foolish to base a home buying decision solely on the amount of income tax the individual saves. Buying a property should be an informed decision as it is a major transaction and from a purely financial point of view, there are many other parameters that the buyer should take into account before deciding for or against the purchase. A reasonable cost advantage is upfront cost, The analysis relating to mortgage cost, ownership expense during the ownership period and expected appreciation also needs to be considered and then a buy versus rent decision should be made.”

Home Loan Tax Exemption Vs Income Tax Slab

advising income tax payers to look at other tax saving options while planning to file their income tax returns; Shruti Khandare, CMO, MyFundBazaar India Pvt Ltd, said, “If you fall in the income tax slab of 30 per cent, it is advisable to buy a home to avoid tax. In case the income tax slab falls around 10 per cent to 20 per cent. Cents, One should consider buying an individual medi-claim for his family including his senior citizen parents, which will enable him to claim income tax exemption on the annual medi-claim premium. 75,000. Additionally, you can go for NPS investment as well as it allows additional income tax exemption on maximum investment under section 80CCD. 50,000 in a financial year.”

Home Loan Tax Benefit Calculator

Speaking on the income tax benefits available on Home Loan EMI repayment; Sebi registered tax and investment expert Jitendra Solanki said, “While paying home loan, a taxpayer can claim income tax exemption up to a maximum of Rs. 3.5 lakh taxable income in a financial year — up to 1.5 lakh on repayment of home loan principal amount and up to Rs.1.5 lakh under section 80C of the Income Tax Act 2 lakh on interest payment of home loan under section 24(b) of the Income Tax Act. However, if the taxpayer is a salaried individual, then in case of claiming the home loan tax benefit Repayment of home loan principal of 1.5 lakh becomes difficult as the tax benefits under section 80C include other exemptions like provident fund, ELSS mutual fund investment, LIC premium payment, school fee payment for children, etc.

Home Loan EMI Calculator

Asking home buyers to use the home loan EMI calculator while buying a home to save money for income tax expenses; Jitendra Solanki said, “In the first 4-5 years of the home loan tenure, around 65 per cent of the monthly home loan EMI goes as home loan interest. Hence, in order to claim tax benefits 2 lakh annual home loan interest repayment, monthly home loan EMI should be around 30,000 this means that the annual home loan EMI will be approx. 3.60 lakhs. Since one must keep the home loan EMI below/at 40 per cent of one’s net take home income, the taxpayer’s annual take home income falls to approx. 9 lakhs. So, if a taxpayer is earning 9 lakhs or more per annum, then home loan EMI in that case can be a good option to save on income tax outgo.”