A home loan is one of the biggest debt obligations you will probably ever take on. This is why the Income Tax Act, 1961 has several sections which offer tax benefits on home loans to make your debt burden lighter. Using a home loan tax saving calculator beforehand will help you have a clear idea of how much tax you can save and what the overall cost of your home loan really will be over its tenure. 

Tax benefits on home loans

Tax benefits on home loans are available on both the principal amount and the interest amount in a financial year. While a home loan tax benefit calculator can help you get an approximate figure on your tax savings, it’s first essential to understand what tax benefits you can avail of when you apply for a home loan. 

• Section 80C: You can claim deductions of up to Rs 1.5 lakh in a financial year towards your principal repayments on your home loan. This deduction can also be claimed for the stamp duty and registration charges of the house. However, it’s important to note that the property cannot be sold within five years of possession.
  
• Section 24b: Under this section, you can claim deductions for the interest paid on home loans up to Rs 2 lakh. However, this is applicable only when you have taken the home loan either for the purchase or construction of a home. If you are using the home loan to construct a property, then such construction should be completed within five years.
  
• Section 80EE: For first time homebuyers, there is an additional tax deduction for interest on home loans available under section 80EE. You can claim a tax deduction of up to Rs 50,000 per year on interest payments. The condition here is that the home loan’s principal amount should not exceed Rs 35 lakh and the property value should not exceed Rs 50 lakh. 
  
• Section 80EEA: This is another tax benefit on interest payments on home loans and is available over and above the section 24b benefit. Here, you can claim a deduction of up to Rs 1.5 lakh a year on interest payments. The stamp duty value of the house should not exceed Rs 45 lakh. 

How to use a home loan tax benefit calculator

Go on to the official website of your preferred bank or financial institution and look for their home loan tax benefit calculator. You will have to enter details such as your annual income, your section 80C investment amount, your home loan principal and home loan interest rate, etc. Once you enter these details, the home loan tax benefit calculator will calculate your tax savings after your home loan. 

Once you have this number, you get the real picture of how much financing your home will really cost you. Tax rules and benefits, however, change often, and also depend upon which tax regime you follow. Hence, it’s advisable to speak with your accountant or financial advisor to confirm your tax savings on your home loan.