Tax benefits of home loans and mortgage
The tax benefits applicable to home loans and mortgage influence both the principal, as well as interest rate applicable. Principal amount set by the lender for the repayment of the loan or mortgage along with other savings like PF, PPF, life insurance etc is eligible for deduction from gross income. This helps savings in a big way. The interest paid on the loan or mortgage after the completion of construction is liable to be deducted from the income from property calculated.
In the case of a self employed person, the income is treated as nil and the interest payment is treated as ‘minus’ income. This is then adjusted against other income and in the case of a rental property it is adjusted against the rental income. The tax benefits attached to home loans or mortgages enable the person seeking the loan to benefit even as he or she is paying back. Lenders all over the world today are extending all the help they can to customers, to enable them to benefit from such tax deductions.