There are several income tax sections which fall in categories where one can easily claim expense and investment deductions in a specific financial year. Deductions such as these are of immense help when it comes to lowering one’s own tax liabilities and overall taxable income. In many situations, there is a lock-in period which is specified and against which you may get a deduction.
Once you fail to maintain this lock-in period, there can be official cancellation about the deductions that were availed. Although no official lock-in period is there for deductions claimed against interest repayments on home loans under Section 24B/80EE, the income tax deduction provisions under Section 80C state that once you sell your home within a period of 5 years from the purchase date, the deduction that you claim on repayment of the principal amount for all the earlier years may be revoked.
In this situation, all deductions that you sought for the repayment of the home loan principal amount as per Section 80C in earlier years will be clubbed before being added to your income in the year of sale and will be taxed based on this. The registration fee and stamp duty paid for registering property will also qualify for deductions as per Section 80C in the purchase year. In case you had claimed any stamp duty and registration fees as deductions, you have to observe the 5-year lock-in period in these cases.
In case you have taken a home loan for constructing or purchasing a home, the interest paid on the home loan and the capital repayment will be eligible for deductions under separate sections of the Income Tax Act. Principal repayment will come under Section 80C with the total limit being Rs. 1.5 lakh annually and the interest repayment will be eligible for deductions as per Section 24 with the total limit being Rs. 2 lakh annually. Under Section 80EE, an extra deduction of Rs. 50, 000 is available for first time home buyers.