How You Can Save Tax Through Home Loans in India

Buying a home is a major financial milestone, and for many Indians, it involves long-term EMIs spanning 15–30 years. To ease this burden, the Government of India offers several income tax deductions on home loans. These benefits significantly reduce your taxable income, making homeownership more affordable.

To help you understand these provisions better, here’s a simplified guide to the three key sections of the Income Tax Act that offer tax relief to homebuyers—Section 24(b), Section 80C, and Section 80EE/80EEA.

🔹 Section 24(b): Deduction on Home Loan Interest

Section 24(b) allows homeowners to claim tax deductions on the interest component of their home loan EMIs.

What you can claim

• Up to ₹2 lakh per year for a self-occupied property

Eligibility Conditions

• The property must be self-occupied (ready or under construction).
• Construction must be completed within 5 years of taking the loan.
• Loan must be taken only for buying or constructing the property, not for repairs or renovation.

If the 5-year condition is not met

The deductible amount drops from ₹2 lakh to ₹30,000 per year.

🧮 Example: Pre-Construction Interest Deduction

If you pay interest before the construction is complete, this amount is called pre-construction interest. It can be claimed in five equal instalments starting from the year the property receives its Completion Certificate.

The principle:
Total Pre-construction Interest ÷ 5 = annual deductible amount

👫 Joint Home Loan Benefits

If two or more people jointly take a loan and co-own the property:

• Each co-owner can claim ₹2 lakh under Section 24(b).
• EMI responsibility must be shared proportionately.

This can double the total tax benefits for the family.

🔹 Section 80C: Deduction on Principal Repayment

Section 80C covers the principal portion of your EMI along with several other payments made during the homebuying process.

What you can claim

• Up to ₹1.5 lakh per year
• Includes principal repayment + stamp duty + registration charges

Important Points

• Stamp duty and registration costs can be claimed only once, in the year they are paid.
• The property should not be sold within 5 years of possession; otherwise previously claimed benefits may be reversed.

🔹 Additional Benefits for First-Time Buyers

The government rewards first-time homebuyers through two separate sections: 80EEA and 80EE.

🏠 Section 80EEA: Additional Interest Deduction (Up to ₹1.5 lakh)

First-time buyers can claim an extra ₹1.5 lakh per year on home loan interest under Section 80EEA.

Eligibility

• Stamp duty value must be ₹45 lakh or less
• Loan sanctioned between 1 April 2019 and 31 March 2022
• Buyer must not own any other property
• Must choose the old tax regime
• Loan must be from a recognised financial institution
• Cannot claim Section 80EE simultaneously

This deduction is over and above the ₹2 lakh under Section 24(b).

🏠 Section 80EE: Deduction of ₹50,000 (For Earlier Loans)

Section 80EE is applicable for home loans sanctioned between 1 April 2016 and 31 March 2017.

Eligibility

• Home value should be ₹50 lakh or less
• Loan amount ≤ ₹35 lakh
• Buyer should not own another property at the time of loan sanction

This benefit is separate from Section 24 and 80C.

📌 Quick Facts to Remember

• Section 24(b) benefits apply under both old and new tax regimes for let-out properties.
• 80EE and 80EEA cannot be claimed together.
• Section 80C’s ₹1.5 lakh limit covers many other investments (ELSS, PPF, EPF, ULIP, NPS).
• Those paying rent (HRA) can also claim home loan benefits, depending on eligibility.

❓ FAQs: Home Loan Tax Benefits