Home loan tax saving

[SaurabhL]

Hello everyone, I bought a house last year in August 23 took a home loan of 90 lakhs @8.5% for 30 years, I am in regular central government job, my wife is also in regular state government job, loan has 3 borrowers my mother, me and my wife, although all of the monthly EMI of Rs. 69300, is deducted from my salaried account only, my mother already has another home loan she will retire next month on June, so can me and my wife both get the tax benefit for this hone loan, I already having 2 lakhs annually investment in NPS under 80C, also got Rs.26000 health insurance & ELSS monthly investment of Rs. 13000
1) What is maximum amount of tax savings me & wife can do on home loan
2) Can we go for Home loan refinancing & after what duration I should go for it & in which bank to save more money
3) What else can I do to save more taxes
4) I took health insurance for myself, sin & wife so can my wife also get tax savings on it

 

[SaurabhL]

Please reply

 

[CA Sunil Chahal]

Section 24(b): Interest Paid on Home Loan

• Each of you (you and your wife) can claim a deduction of up to Rs. 2 lakhs per financial year on the interest paid on the home loan. Since all three of you are borrowers, the total deduction you can claim together is Rs. 6 lakhs annually (Rs. 2 lakhs each).
• However, there might be a restriction based on the proportion of ownership in the property.

Section 80C: Principal Repayment

• You can both claim a deduction of up to Rs. 1.5 lakhs each on the principal amount you repay towards the home loan every year, subject to a total deduction limit of Rs. 1.5 lakhs per person under Section 80C.
• Health Insurance Premium: You can claim tax deductions under Section 80D for health insurance premiums paid for yourself, your wife, and dependent parents. The maximum deduction is ₹25,000 (₹50,000 for parents if they are senior citizens).
• For other deductions claim other deductions you're eligible for, such as leave travel concession (LTC), medical expenses for senior citizens (parents), interest on education loan, etc.

Home Loan Refinancing:
Refinancing can be a good strategy to reduce your EMIs or shorten your loan tenure if you can secure a lower interest rate. However, consider the following factors:

• Current Interest Rate: Compare your current rate (8.5%) with prevailing market rates. If you can get a significantly lower rate (around 1-2% lower), refinancing might be beneficial.
• Prepayment Penalty: Check your loan terms for any prepayment charges that might outweigh the savings from a lower rate.
• Processing Fees: Refinancing typically involves processing fees. Ensure the long-term savings from a lower rate justify these upfront costs.

 

[SaurabhL]

Thanks a lot, got some new information