Let’s understand in simple local language how you can save tax by claiming deduction on home loan interest.
Buying a home is not just a dream but also a smart financial move in India. The government supports this dream by giving income tax benefits on home loans. If you have taken a home loan, you can claim tax deductions on both the principal repayment and the interest paid. In 2025, these benefits continue under sections 80C, 24(b), 80EE, and 80EEA of the Income Tax Act.
Table of Contents
1. Deduction under Section 80C – Principal Repayment
When you repay your home loan, one part of your EMI goes towards the principal amount. This portion qualifies for deduction under Section 80C.
- Maximum deduction allowed: ₹1.5 lakh per year
- Includes: repayment of principal, stamp duty, and registration charges
- Condition: The property should not be sold within 5 years of possession; otherwise, the deduction claimed earlier will be reversed.
2. Deduction under Section 24(b) – Interest on Home Loan
The biggest benefit comes from interest deduction on your home loan.
- You can claim up to ₹2 lakh per year for a self-occupied property.
- If the house is let out on rent, there is no maximum limit, but loss set-off is restricted to ₹2 lakh in a financial year.
- Loan should be taken for purchase or construction of a house, and the construction must be completed within 5 years from the end of the financial year in which the loan was taken.
3. Additional Deduction under Section 80EE
This section was introduced for first-time homebuyers.
- Extra deduction of ₹50,000 per year on interest paid
- Conditions:
- Loan amount should not exceed ₹35 lakh
- Property value should not exceed ₹50 lakh
- Loan should be sanctioned between 1 April 2016 and 31 March 2017 (only for those who still continue such loans)
4. Additional Deduction under Section 80EEA
To encourage affordable housing, government introduced 80EEA.
- Extra deduction of ₹1.5 lakh per year on interest paid
- Conditions:
- Loan should be sanctioned between 1 April 2019 and 31 March 2022 (benefit still continues for ongoing loans sanctioned in this period)
- Property value should not exceed ₹45 lakh
- This deduction is over and above Section 24(b) limit of ₹2 lakh.
5. Joint Deduction On Home Loan Benefits
If you take a joint home loan (with spouse, parents, or siblings), both co-borrowers can claim deductions separately, provided they are also co-owners of the property.
For example:
- Principal repayment under 80C: ₹1.5 lakh each
- Interest under 24(b): ₹2 lakh each
This doubles the tax benefit for the family.
6. Important Points to Remember
- You need to provide a home loan interest certificate from the bank/NBFC to claim deductions.
- Deduction is available only after the construction is completed. No benefit is available during construction, except that interest paid during construction can be claimed in 5 equal installments after completion.
- Deductions can be claimed under both old and new tax regimes, but in the new regime, many exemptions are not allowed. So, if you want to claim home loan benefits, mostly the old regime is better.
Conclusion
Home loan not only helps you achieve the dream of owning a house but also gives big tax savings. By properly using Section 80C, 24(b), 80EE, and 80EEA, you can reduce your taxable income significantly in 2025. Always keep documents like interest certificate, registration deed, and loan statement ready to avoid any issues during filing.
If you are a salaried employee or a first-time homebuyer, planning your loan and taxes together will help you save money and make your dream home more affordable.
FAQs on Home Loan Tax Deduction
Q1. Can I claim home loan benefits in the new tax regime 2025?
No, most exemptions like 80C and 24(b) are not allowed in the new tax regime. To claim home loan benefits, the old regime is better.
Q2. Can I claim both Section 24(b) and 80EEA deductions together?
Yes, you can claim both. First, claim ₹2 lakh under 24(b), then an additional ₹1.5 lakh under 80EEA if eligible.
Q3. Can both husband and wife claim home loan deductions?
Yes, if both are co-owners and co-borrowers, each can claim up to ₹1.5 lakh under 80C and ₹2 lakh under 24(b).
Q4. Can I claim tax benefit during home construction?
No, benefits are available only after construction is complete. But, pre-construction interest can be claimed in 5 equal installments after completion.
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