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What are the Tax benefits you will get on a Home Loan?


Gather around all you homeowners-to-be because today we’ll be exploring a topic that’s going to put a smile on your face AND your wallet- “Income Tax Benefits on Home Loans”. Now, we get that taxes might feel like a boring chapter in your Life’s Book, but trust us, once you get to know the benefits, you’ll feel that tax perks are like the coolest sidekicks you never knew you needed!

You’re not just getting that pretty home you pictured or dreamed about, you’re also getting a golden ticket to financial perks. It’s as exciting as finding that extra fry at the end of your takeout bag!

But wait, there’s more!

Before you think we will be giving you some fancy algebra problems to figure out what tax is, don't worry that’s not the case in this blog. This article will be a clear guide through this maze of tax deductions.

So, let’s start unlocking the treasures of Income Tax Benefits on Home Loans.

As a preliminary step, you first need to know the main components of a Home Loan.

Let’s find out what they are and how they can benefit you.

For starters, a Home Loan consists of two main characters:

  • Principle amount
  • Interest amount payable

So, there are two acts under which you can avail the income tax benefits on a Home Loan that apply differently for these two components. The benefits lie under these two acts of the Income Tax Act 1961 of section 80C and 24(b).

Below are the 4 perks mentioned:

1. What are the Tax deductions for a Home Loan under section 80C?

With the help of section 80C, you can claim benefits on:

  • The principal amount and
  • The registration and stamp duty

Principle Amount: The maximum amount of 1.5 lakhs can be deducted from the total principal amount. Only after the construction of the property is completed the benefit is available for you.

The downside is if you sell the property within 5 years of possession, the deduction you received on the principal amount will be added back to your income account the same year you sold the property.

In simple words, the tax benefit will be rebuked.

Registration and Stamp Duty: This benefit is similar to what benefits you receive on the principal amount. Besides the principal amount, the expenses incurred can be claimed during the purchase of the property, although here, these expenses are not tied to the presence or absence of a home loan and have to be covered within the 1.5 lakh limit.

In other words, this particular tax benefit does not depend on whether you have a home loan or not. The reason behind allowing this is to reduce the financial burden on people buying a home.

Let’s discuss the second most important component of a Home Loan.

2. Tax deduction on interest paid: Under section 24B –

With the help of section 24B, you can claim benefits on:

  • Pre-construction
  • Post-construction

Pre-construction: You can get a deduction of up to 2 lakhs on the interest amount, whether it is self-occupied or given out for rent. This benefit is provided only on properties that have completed the construction within the 5-year time period.

In case the construction span extends the time frame, you can claim Rs. 30,000 per year only for interests related to buying, reconstructing, renovating, and repairing.

On the flip side, if you are renting the property you bought with the loan, you don’t need a time limit to finish the construction. The full interest you pay on the loan can be deducted.

Post-construction: After the construction is completed, you may continue to pay the interest on the home loan. You can claim a deduction on post-construction as well. It should be subject to the annual limit of 2 lakhs.

3. How much Tax Benefit for a Home Loan can you get for a Joint Home Loan?

Let us tell you how much tax benefit on a home loan you can get by putting it this way.

How about a scenario to go around? Have you ever discussed life with your best bud during your schooling days? Every time you hung out together, you’d talk about how you guys would love to live like roomies and adopt a pet, setting up dates on who would cook food and who would wash the dishes.

Well, now that you’re older and everything's forgotten, why not bring back the memories, but now only with legit planning? We’re talking about joint home loan.

The fun part is you can both get to enjoy tax benefits. Confused? By taking a joint home loan, both the individuals can claim a deduction for an interest of up to 2 lakhs each. Plus, a 1.5 lakhs repayment on the principal amount each.

But wait, don’t stop reading! Since you both are co-owners and co-borrowers of the property, you can easily split the deduction that makes the most financial sense for your situation.

By splitting the interest deduction, you effectively double the tax benefits. Instead of one person claiming the entire deduction, you can enjoy a share of the deduction based on your ownership percentages.

4. What are the Tax Benefits for a first-time buyer?

For a first-time buyer, you can receive additional tax benefits on home loan interest under section 80EE and section 80EEA of the Income Tax Act 1961.

Under Section 80EE:

If you fall under the criteria of a first-time home buyer, you can claim the following tax benefits.

  • A rookie buyer is given the benefit of the doubt by getting offered an additional deduction on the interest rate of Rs. 50,000. This deduction can be claimed during the financial year.
  • In addition to the deduction that is available under section 24.
  • However, the property's value cannot increase more than 50 lakhs, and the loan must not exceed 35 lakhs.
  • On the date of sanction, you should not own any other house.
  • This deduction only applies if the loan is sanctioned between the financial year.

Under Section 80EEA:

With this, you can claim the benefit in order to make housing more affordable.

  • To claim this perk, you should be a first-time homebuyer, and then you can claim an additional deduction of 1.5 lakhs on the interest.
  • This is besides the deduction available under Section 24 and Section 80EE.
  • In this, the property's value should not exceed 45 lakhs, and the loan taken should not exceed 25 lakhs.


Right then, let’s wrap this journey up before you get any more bored with all the “Tax Talks”. Before you go, remember this: your best pal and your allies are your tax benefits in this adventure. Bear in mind that you’re not just buying a home you’re building your financial future.

This golden ticket to financial perks isn’t just words written in a blog; they are the key to unlocking a brighter, more financially secured future. We hope this article helps you with the best information possible. Happy house hunting!

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