Save Taxes with Your Home Loan
Did you know that your home loan can help you save a big amount in income tax every year? Whether you’re paying EMIs for a new house or constructing your own home, the government offers various tax benefits on home loan under the Income Tax Act. These benefits are available on both the principal and interest paid, helping you reduce your overall tax liability. In this article, we will explain all the important sections, limits, and eligibility criteria in simple and easy-to-understand language.
1. Tax Deduction Under Section 80C – On Principal Repayment
You can claim up to ₹1.5 lakh per year as a deduction under Section 80C for the principal amount you repay through EMIs.
Conditions:
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The house must not be sold within 5 years of possession
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Only applicable for fully constructed residential property
This deduction also includes stamp duty and registration charges (claimed only once in the year of payment).
2. Tax Deduction Under Section 24(b) – On Interest Paid
You can claim up to ₹2 lakh per year on the interest portion of your home loan EMI under Section 24(b).
Key Points:
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The property must be self-occupied
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If the property is rented, there is no upper limit on interest deduction
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Construction must be completed within 5 years from the end of the financial year in which the loan was taken
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3. Additional Deduction Under Section 80EE
First-time homebuyers can claim an additional deduction of ₹50,000 under Section 80EE (subject to conditions).
Eligibility:
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Loan amount should not exceed ₹35 lakh
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Property value should not exceed ₹50 lakh
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The loan must be sanctioned between April 1, 2016, and March 31, 2017
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You must not own any other house at the time of loan approval
4. New Benefit Under Section 80EEA (for Affordable Housing)
If you missed the 80EE benefit, and you bought an affordable house, you can claim up to ₹1.5 lakh additional interest deduction under Section 80EEA.
Conditions:
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Property stamp duty value should not exceed ₹45 lakh
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The loan must be sanctioned between April 1, 2019, and March 31, 2022
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The buyer must not own any other residential property
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5. Joint Home Loan Tax Benefits
If you take a joint home loan, both applicants (e.g., husband and wife) can claim tax benefits separately.
Benefits:
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Each co-borrower can claim ₹1.5 lakh under 80C
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Each can also claim ₹2 lakh under Section 24(b)
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The property must be co-owned and co-borrowed
This doubles the total tax savings for the household.
Conclusion
Taking a home loan not only helps you buy your dream home but also offers great tax-saving benefits. By using deductions under Section 80C, 24(b), 80EE, and 80EEA, you can reduce your annual tax outgo by a large margin. Whether you are a salaried individual or a business owner, these benefits make a home loan a smart financial decision. Plan your loan and documents well to get the maximum tax advantage.