tax benefits on home loan in india

Buying a house? Discover all the tax benefits on home loans in India under Sections 80C, 24(b), and 80EEA. Learn how to save money while repaying your home loan.

minerva

Jul 14, 2025 - 13:38

Tax Benefits on Home Loan in India

Buying a home is a big dream for most Indians. With rising property prices, a home loan often becomes the only way to make this dream come true. But did you know that a home loan can also help you save money through income tax benefits?

Lets break it down and understand the key tax deductions available on home loans in India. These benefits can significantly reduce your tax burden while you repay your loan.

1. Deduction Under Section 80C Principal Repayment

You can claim up to ?1.5 lakh per financial year on the principal repayment of your home loan under Section 80C.
This includes payment towards the stamp duty and registration charges (only in the year these expenses are incurred).
The house must not be sold within 5 years of possession; otherwise, the deduction will be reversed.

Maximum Limit: ?1.5 lakh per year
Condition: House must be self-occupied or rented
Includes: Principal + stamp duty + registration charges

2. Deduction Under Section 24(b) Interest on Home Loan

Under this section, you can claim up to ?2 lakh per annum on interest paid on a home loan.
The house must be either self-occupied or vacant (not let out).
If the property is rented, there is no upper limit on interest deduction, but overall loss from house property is capped at ?2 lakh.

Maximum Limit (self-occupied): ?2 lakh
For let-out property: No limit
Condition: Construction must be completed within 5 years from the end of the financial year in which the loan was taken

3. Deduction Under Section 80EE First-Time Home Buyers

If you're a first-time home buyer, you can get an additional deduction of ?50,000 under Section 80EE.
This is over and above the deductions under Sections 80C and 24(b).
Applicable only if the loan amount is ?35 lakh or less and the property's value is ?50 lakh or less.

Maximum Limit: ?50,000 per year
Condition: Home loan sanctioned between April 1, 2016, and March 31, 2017
Loan should be from a financial institution

4. Deduction Under Section 80EEA Affordable Housing

Introduced as an extension of 80EE, this provides an additional deduction of ?1.5 lakh for interest on home loan under affordable housing.
Applicable only if the stamp duty value of the house is ?45 lakh or less.
You should not be claiming benefit under Section 80EE.

Maximum Limit: ?1.5 lakh
Condition: Loan sanctioned between April 1, 2019, and March 31, 2022
For individual taxpayers only

5. Joint Home Loan Benefits

If you take a joint home loan (like with a spouse or parent), both borrowers can claim tax deductions:

Principal (80C): ?1.5 lakh each
Interest (24b): ?2 lakh each
Ownership share must be clearly defined

This means a couple can together claim up to ?7 lakh in tax deductions annually.

Example Scenario for Better Understanding

Lets say you are a first-time home buyer and took a loan of ?30 lakh for a house worth ?45 lakh.

Under Section 80C: ?1.5 lakh for principal
Under Section 24(b): ?2 lakh for interest
Under Section 80EEA: ?1.5 lakh additional interest

So, total tax benefit = ?5 lakh per year

Important Notes:

Keep all loan statements and interest certificates handy for tax filing.
Ensure the property is in your name to claim benefits.
Under-construction property interest can be claimed after possession (in 5 equal installments).

Conclusion

Home loans dont just help you buy your dream housethey can also reduce your tax liability in a big way. From Section 80C to 80EEA, the Indian government offers multiple ways for taxpayers to save while paying their EMIs.