Purchasing a home is both a safety and security move for an individual. If you are planning to buy a house or planning to apply for a home loan, you need to understand the ways through which you can reduce the tax payments, and the government of India can help you do the same. The Indian government has made some provisions in the Income Tax Act that can help you in availing home loan tax benefit.
Read the article to learn about the know-how around the Income Tax Act and get a thorough understanding of the sections.
Provisions Of Tax On Home In Budget 2025
In the previous budgets, the annual value of up to two occupied houses by the same individual was considered to be zero only if the owner couldn’t live there. But now, as per Budget 2025, the annual value of up to two occupied houses by the same individual will be considered zero, irrespective of the owner’s living.
How Has The New Tax Regime Impacted The Home Loan Tax Benefits?
Home loan tax benefits in the New Tax Regime are laid down below in points for one’s reference and better understanding:
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Under Section 80C, deductions for the payment of the principal component of home loan, stamp duty, and registration charges, along with Section 80EE & 80EEA, will not be applied.
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Section 24(b) is related to the interest payment on the home loan that will not be levied on homeowners' properties. However, if it’s a rented property, deductions will apply.
Deductions Under Various Sections
Deductions under various sections are laid out below to avoid any confusion. Refer to the following points:
1. Deduction For Interest Paid On Housing Loan Under Section 24
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This section is for enjoying tax benefits on home loan interest. If you’re planning to take a home loan, then as per this section, the interest portion of the whole loan can be claimed as a deduction from one’s total income up to a maximum of Rs. 2 lakh.
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From 2018-19, if you own a house, the deduction on interest can go up to Rs. 2 lakh.
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If you’ve rented out the property, then there is no upper limit for claiming tax exemption on interest.
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If you were building your house and it took more than 5 years of construction, the claimed deduction on interest can go up to Rs. 30,000 only.
2. Deduction Paid During Pre-construction Period
If you purchased an under-construction property and have been paying its EMIs without living in it yet, you can claim the interest on the loan as a deduction. However, the under-construction home loan tax benefits will begin only after the completion of construction or immediately in case you bought an already constructed house.
3. Deduction On Principal Repayment
According to Section 80C, one can claim the principal amount of the home loan as a deduction, wherein the maximum amount can only go up to Rs. 1.5 lakh. However, to enjoy this tax benefit on a home loan, the property shouldn’t be sold for at least 5 years after purchasing it.
4. Deduction For Stamp Duty & Registration Charges Under Section 80C
People are now allowed to claim deductions for stamp duty and registration charges up to Rs. 1.5 lakh.
5. Additional Deduction Under Section 80EE
Following Section 80EE, you can claim a maximum deduction of Rs. 50,000. But this can only be availed in certain conditions:
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The Loan shouldn’t exceed Rs. 35 lakh, and the total value of the property shouldn’t exceed Rs. 50 lakh.
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1st April 2016 to 31st March 2017 is the time given for loan approval.
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The house bought should be the first owned property of an individual.
6. Additional Deduction Under Section 80EEA
Following this section, an extra deduction of Rs. 1,50,000 was introduced in Budget 2019. But to avail of the income tax benefit on home loan, please ensure that you fulfil the criteria mentioned below:
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The property’s stamp value should not exceed Rs. 45 lakh.
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1st April 2019 to 31st March 2022 is the time given for loan approval.
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The house bought should be the first owned property of an individual.
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If a homeowner claimed a deduction under Section 80EE, they won’t be able to apply for deductions under Section 80EEA.
Read More: Claiming 80EEA: A Guide For Home Loan Transfers
7. Deduction For Joint Home Loan
If a home loan is taken jointly by two people, they can avail of tax benefits on home loan interest up to Rs. 2,00,000 each and principal repayment under Section 80C up to Rs. 1.5 lakh each in tax returns.
For joint home loan tax benefits, the property must be co-owned to claim a larger tax benefit.
Summary Of Tax Benefit On Home Loan
We have curated a table so that you can understand the tax benefit on home loan in a much easier way:
| Deduction on the following portions | Section | Maximum Deduction | Conditions |
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| Principal portion of loan repaid | 80C | 1.5 lakh | House property not to be sold within 5 years of ownership. |
| Interest incurred during the year | 24(b) | 2 lakh | · Loans should be taken for the purchase or construction and must be finished within 5 years. · Pre-construction interest levied as a deduction and subject to around 2 lakhs. · No restriction of Rs. 2,00,000 on rented properties. |
| Interest incurred during the year | 80EE | 50,000 | · The loan amount should be around Rs. 35 lakh or less and not more than Rs. 50 lakh and should be taken between 1st April 2016 to 31st March 2017. |
| Interest incurred during the year | 80EEA | 1.5 lakh | The property’s stamp value should not exceed Rs. 45 lakh. 1st April 2019 to 31st March 2022 is the time given for loan approval. |
| Stamp duty, Registration fees, etc. | 80C | 1.5 lakh | It can be claimed only in the year when the expenses were borne. |
Loss Under The Head House Property
If you haven’t rented out your house, you may still face a loss under the ‘Income from House Property’ section. Even if the property is rented out, you may still face a loss because there’s no upper limit, as per Section 24.
In such situations, you can set a maximum of Rs. 2 lakh against other incomes like salary. If the loss is more than Rs. 2 lakh, one can carry it forward for up to 8 years can use it later for home loan tax exemption.
Conclusion
Through the sections in the Income Tax Act, the government of India has been helping people pay taxes without it being a monetary burden on them. Hence, all of us must understand the Sections in the Income Tax Act to avail for tax benefit on home loan.
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