Home Loan Tax Benefits under Section 80C and 24B
Buying a home is a major milestone, and in India, the government offers substantial tax benefits to make it more affordable. If you have taken a home loan, you can claim deductions under Section 80C and Section 24B of the Income Tax Act. These benefits help you save thousands of rupees annually.
Maximum Tax Savings Available
Section 80C
₹1.5 Lakh
Principal repayment deduction per year
Section 24B
₹2 Lakh
Interest payment deduction per year
1
Section 80C – Deduction on Principal Repayment
Under Section 80C, you can claim a deduction of up to ₹1.5 lakh per year on the principal portion of your EMI. This also includes stamp duty and registration charges (only in the year of purchase).
Key Points
- Maximum limit: ₹1,50,000 per financial year
- Only applicable after the property is fully constructed
- Includes stamp duty and registration charges
- Available for both self-occupied and rented properties
2
Section 24B – Deduction on Interest Paid
Section 24B allows for a deduction on the interest component of the EMI. You can claim up to ₹2 lakh per year for a self-occupied house.
Property Type Limits
- Self-occupied property: ₹2,00,000 annually
- Rented property: No upper limit (subject to overall loss limit)
- Let-out property: Full interest amount can be claimed
- Vacant property: Treated as self-occupied
3
Pre-Construction Interest Benefit
You can also claim tax benefit on interest paid during the pre-construction phase. This amount is allowed in 5 equal installments starting from the year the construction is completed.
Example: If you paid ₹3 lakhs in interest before construction completion, you can claim ₹60,000 per year (₹3,00,000 ÷ 5 years).
4
Joint Home Loans – Double the Benefit
If you take a joint home loan with your spouse or parent, both co-borrowers can claim tax benefits individually under 80C and 24B—provided both are co-owners and contribute to repayment.
💰 Joint Loan Maximum Savings
Up to ₹7 lakh total tax deduction (₹3.5 lakh per co-borrower)
Tax Savings Calculation Example
Annual EMI
₹2,40,000
Principal Component
₹80,000
Interest Component
₹1,60,000
80C Deduction
₹80,000
24B Deduction
₹1,60,000
Tax Rate (30%)
30%
Annual Tax Savings
₹72,000
5
Conditions to Remember
Important Conditions
- Home loan must be from a recognized bank, NBFC, or housing finance company
- Tax benefits are allowed only if the construction is completed within 5 years
- Taxpayer must be an owner or co-owner of the property
- Property should not be sold within 5 years (to avoid benefit reversal)
- Proper documentation and certificates required from lender
Conclusion
Understanding home loan tax benefits under Section 80C and 24B can help you plan your finances better and maximize savings. With potential annual savings of up to ₹1.05 lakh (at 30% tax rate), these deductions significantly reduce the effective cost of your home loan. Always consult a tax advisor to ensure full compliance and benefit realization.
