Tax Benefit on Home Loan

Tax Benefit on Home Loan
  • Jun 28, 2024

Tax Benefits on Home Loans: What Every Home Loan Provider Wants You to Know

In 2024, people seek help from home loan providers to ease their financial burdens because buying a house is a very big investment that people make. Alongside the support that these providers offer the Indian government has put forward certain tax benefits to encourage home ownership. An understanding of these benefits will help you in making better decisions and thus save more money in the process. This guide seeks to talk about the several tax benefits related to home ownership.

Section 80C: Deduction on Principal Repayment

A fact about the tax deduction that many people know about one that offered in Section 80C of India’s Income Tax Act of 1961. In marketing their products, mortgage financiers have identified this deduction because it permits those who borrow money through their access to deductions amounting to as much as rupees 1.5 lack for repayment made on their primary residence credit project. This particular dispensation falls within the larger ceiling placed on it together with other purchases such as Public Provident Fund (PPF), Equity Linked Savings Schemes (ELSS) as well as up-to-date insurance premium campaigns all regarded as part of a wider investment spectrum introduced by changes in current legislation.

Key Points:

      Applicable to the principal component of your home loan EMIs.

      Ensure property should not be sold within five years of possession. Otherwise, the deductions will be reversed in the year of sale.

      The house property must be completed, and the certificate of completion must be obtained.

Section 24(b): Deduction on Interest Payment

When you borrow money to buy a home and pay it back as interest on a home loan. It would be deducted from your salary, and the law permits it to be tax deducted according to an article in the Income Tax Act known as section 24(b). The homeowners can claim up to a maximum of ₹ 2 lakh per annum towards the interest paid for their home loan equated monthly installments (EMI) under this section. Additionally, it is worth noting that this interest can also be spread over five equal installments starting from that year during which point construction work for such properties had been completed, thereby spreading out the benefits of such treatment even more than before.

Key Points:

      The property must be self-occupied for the ₹2 lakh limit to apply.

      If the property is let out, there is no maximum limit for claiming the interest paid.

      Interest rates might be different for under-construction properties. Once the construction is completed, you can be claimed in five equal installments

What are the eligibility criteria?

      Make sure the stamp duty amount is not more than Rs 45 lakh.

      Section 80EE should not allow the taxpayer to claim a deduction.

      The taxpayer is required by law to have no residential property on the date the loan is sanctioned.

The tax advantages of a combination home loan can increase when a co-applicant, such as a spouse or family member, is involved. Each of the co-applicants can claim deductions on both the principal and interest components. However, provided that they do not exceed the limits in Sections 80C and 24(b). Thus, families can reduce their total tax bills by a significant amount.

Key Points:

      Both co-applicants must be co-owners of the property.

      Both must be individually responsible for repaying the loan.

Understanding Home Loan Providers' Role

The acquisition of these taxable benefits depends on home loan givers. They provide documents such as interest certificates and principal repayment statements that are necessary for deduction claims. Besides advising on other issues, some known home loan givers will even advise potential borrowers on how they can better their position concerning taxes.

How to Claim Tax Benefits

  1. Documentation: Ensure you have all the necessary documents, including the home loan interest certificate, principal repayment statement, and possession/completion certificate.
  2. Filing Income Tax Returns: Accurately report your home loan details while filing your income tax returns.
  3. Consultation: Consider consulting a tax advisor or your home loan provider for detailed guidance on claiming tax benefits.


If you know the tax benefits that accompany home loans. However, it will be of help to you financially and make home possession cheaper. By lending out money to buy the house and ensuring that one fully utilizes these incentives, home loan providers can help in this connection. When you maximize your deductions under Sections 80C, 24(b), 80EE, and 80EEA. Additionally, it is possible to bring down your tax payable and thus improve your overall financial health. Always stay informed and consult with professionals to ensure you are making the most of the available benefits.

Moreover, simplify the complex process of home financing and tax planning. Thus realizing one's dream of owning a home and at the same time getting some financial benefits, one should consider partnering with a reputable home loan lender.

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