Should you take home loan to save income tax?

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home loan to buy residential or commercial property? Can we offset the interest on such a home loan against our income to reduce the tax liability? Can we buy a commercial property and let it out? The rental income so generated can be repaid back to the bank towards the home loan, as EMIs. Will this help us in saving tax and asset creation ? Answer: In addition to the tax benefits under Section 80C, you both can avail of the tax benefits under Section 80CCD(1B) by investing in NPS up to ₹50,000. As far as your query on tax benefits available for a home loan is concerned, please note that the income which you earn from letting out any property shall be taxable under the head “Income from house Property".

From the rent received, you are allowed a deduction of 30% of the rent received. In respect of the interest on loan taken for such let-out properties, you can claim the full interest under Section 24. Please note that the interest paid on a loan taken from anyone is eligible for this deduction.

The income tax law also allows you tax benefits in respect of principal repayment of loans taken for the purchase or construction of residential houses from banks and specified financial institutions. However, this benefit is available within the overall limit of ₹1.50 lakh under Section 80C. Yes of course this will help you in saving tax and asset creation.

The tax benefits will be available on the basis of your share in the home loan. So if you buy a commercial property you will be able to claim the benefit for interest paid. Please note though there is no restriction on the quantum of interest that you can claim in respect of a let-out property but any loss under the head “Income from house property" can only be set off against