Home Loan Tax Benefits

Check the tax deductions you can get on your home loan under Sections 80C, 80EE, 80EEA & 24

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The Indian government offers tax benefits on home loans to encourage citizens to purchase real estate. These exemptions encourage you to invest and save, making homeownership affordable and convenient, while also boosting the real estate sector. Provisions like Section 80C, Section 24 and Section 80EE have been laid down under the Income Tax Act of 1961, to claim deductions on home loans.

Tax Benefits on Home Loans

The home loan tax benefits under the applicable sections of the Income Tax Act of 1961 are listed below:

Provisions of the Income Tax Act	Maximum Deductible Amount
Section 24	₹2 Lakhs
Section 80C	₹1.5 Lakhs
Section 80EE	₹50,000
Section 80EEA	₹1.5 Lakhs

*Disclaimer: These are subject to change as per the revisions made in the Union Budget. Verify the details from the Income Tax Department of India’s official portal.

Deductions Under Section 80C

Here are the details:

You can get an exemption of up to ₹1.5 Lakhs every year under this section
You cannot sell the house for at least 5 years since possession, to claim the tax benefits on a home loan
If you sell the home within 5 years, the deductions shall be reversed. These will be counted as income for the year in which the sale is made.
You can enjoy tax deductions on home loans taken for the purchase or construction of a new residential property

Deductions Under Section 24

You can get tax deductions on the repaying the interest component of your home loan under Section 24:

Section 24 allows you to enjoy deductions on interest of the home loan EMI paid over the year. Under this section, you can enjoy deductions of up to ₹2 Lakhs
The interest paid on a home loan for a rented property also qualifies for a deduction
If the construction of the property is not completed within 5 years, you can claim deductions of up to just ₹30,000
This deduction is available from the year in which the house is constructed

Deductions Under Section 80EE

Under this section, you can get an additional deduction as a first-time home buyer.

You can get a deduction of up to ₹50,000 on the interest component of the home loan each year
You can get a deduction over and above the ₹2 Lakhs as available under Section 24(b)
The value of the property must be less than ₹45 Lakhs

Deductions Under Section 80EEA

If you are not eligible for a deduction u/s 80EE, don’t worry. You can get tax benefits under Section 80EEA:

You can get tax benefits of up to ₹50,000 u/s 80EEA
Home loans taken between April 1, 2016 and March 31, 2017, qualify for the deduction For this, the loan amount should be ₹35 Lakhs or less. Meanwhile, the property’s stamp duty value should not exceed ₹45 Lakhs.
You should not have any residential property registered under your name at the time of loan sanction

Differences in Tax Deductions under Old and New Regimes

Let’s understand the tax benefits you can claim under each regime:

Sections	Old Regime	New Regime
Section 24	Applicable	Applicable on property let-out for rent
Section 80C	Applicable	Not Applicable
Section 80EE	Applicable	Not Applicable
Section 80EEA	Applicable	Not Applicable

How To Claim Tax Benefits on Home Loans

The process to claim your tax deduction is as follows:

Evaluate the amount you wish to claim as tax deduction
Submit your home loan interest certificate to your employer to amend the TDS
Fill and submit your income tax returns. Mention the applicable deductions in the fields as requested

Home Loan Taxation & Terminologies

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How much tax can I save with a home loan?

You can claim deductions of up to ₹50,000 under Sections 80EE/EEA of the Income Tax Act, 1961. Similarly, you can get a tax exemption of up to ₹1.5 Lakhs u/s 80C. Furthermore, you can enjoy home loan tax benefits of up to ₹2 Lakhs under Section 24.

Is a home loan top-up eligible for tax deduction?

Yes, a top-up home loan is eligible for tax deductions under Sections 80C and 24.

Who can get tax deductions on home loans?

The main applicant who owns the property is eligible for a tax deduction. If the spouse is a co-borrower, he/she is also eligible for tax benefits.

The property I purchased with a home loan is still under construction. Can I claim tax benefits?

You will not be able to claim tax deductions until the construction is finished. Post-construction, you can claim the total interest paid for the period before gaining possession. This can be claimed in 5 equal instalments from the year the construction is finished.

Is my spouse eligible for an income tax deduction in case we purchase a home together?

Yes, if your partner is employed, you can claim separate deductions on your tax forms. You both can get deductions of up to ₹1.5 Lakhs under Section 80C. If the house is jointly owned, each co-owner can claim interest on borrowed money deductions of up to ₹2 Lakhs u/s 24.

Is it possible to claim tax benefits on two home loans?

Yes, you can enjoy tax benefits on a second home loan. However, do note that you can claim tax exemptions only up to the specified limits as specified in the sections of the Income Tax Act, 1961.

What happens to tax benefits on interest, in case the property is sold within 5 years of acquisition?

If you sell your home within 5 years, the deductions you received are reversed. Alternatively, it will be considered as income for the years when the income tax is due.

What are the factors responsible for home loan tax deduction calculation?

The assessment year and your income are considered when calculating your tax deductions. Also, the interest and principal amount of your home loan plays a major role.