Home Loan Tax Benefits: Section 24(b), 80C, 80EE & 80EEA
Complete guide to claiming tax deductions on home loan interest and principal
- Section 80C: Rs 1.5 lakh deduction on principal repayment (shared with other 80C investments)
- Section 24(b): Rs 2 lakh deduction on interest for self-occupied property (unlimited for let-out)
- Section 80EEA: Additional Rs 1.5 lakh for first-time buyers (stamp value under Rs 45 lakh)
- Joint Loan: Both borrowers can claim separately - doubles the benefit to Rs 7 lakh
- Pre-Construction: Claim interest in 5 equal installments from possession year
Save Up to ₹3.5 Lakh Annually
Two Major Tax Benefits on Home Loan
Understanding these two separate deductions can help you maximize your tax savings
₹1.5 Lakh
Maximum Annual Deduction
₹2 Lakh
Self-Occupied Property
(₹1.5L Principal + ₹2L Interest = Tax saving of up to ₹1.09 Lakh at 31% tax rate)
Section 24(b): Interest Deduction Details
Interest benefit varies based on property type and occupancy status
| Property Type | Maximum Deduction | Key Points |
|---|---|---|
Self-Occupied | ₹2,00,000/year | Available in both old & new tax regime |
Let-Out (Rented) | No Limit | Full interest amount allowed as deduction |
Under Construction | ₹2L/year | Claimed in 5 equal installments after completion |
Vacant (Not rented) | ₹2,00,000/year | Treated as self-occupied for tax purposes |
Important: 5-Year Lock-in for 80C
Joint Loan Strategy: When buying property with your spouse, take a joint home loan with both as co-borrowers. Each person can claim Rs 1.5L principal (80C) + Rs 2L interest (24b) = Rs 3.5L each, totaling Rs 7 lakh in combined deductions. Make sure both are co-owners of the property. Use our Home Loan EMI Calculator to plan your purchase.
Section 80EEA: Bonus for First-Time Buyers
Eligibility Criteria:
Loan Sanction Period
April 1, 2019 to March 31, 2022
Property Value
Not exceeding ₹45 lakh
Loan Amount
Not exceeding ₹35 lakh
First-Time Buyer
No other house owned on sanction date
Real Example: Tax Savings Calculation
Income & EMI Details
Tax Deductions
Taxable Income: ₹15L - ₹3.5L = ₹11.5L
Tax Saved: ~₹1,08,500 at 31% tax rate
Joint Home Loan: Double the Benefits
Borrower 1
Borrower 2
Combined Deduction: ₹7 Lakh for the couple!
Both must be co-owners and co-borrowers of the property
Documents Required
| Document | Purpose | Required For |
|---|---|---|
Home Loan Sanction Letter | Proof of loan approval | Both 80C & 24(b) |
Interest Certificate | Annual interest paid proof | Section 24(b) |
Principal Statement | Annual principal paid proof | Section 80C |
Property Documents | Sale deed, registration | All claims |
Possession Certificate | For under-construction property | If applicable |
Key Points to Remember
- Principal deduction (80C) available only under old tax regime
- Interest deduction (24b) available in both old and new regime
- Don't sell property within 5 years or 80C benefit will be reversed
- Get interest certificate from bank before filing ITR
- Joint loan = double benefits, but both must be co-owners
- Under-construction interest is claimed over 5 years post-completion
Related Calculators
Home Loan EMI Calculator
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Income Tax Calculator
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