Homeownership can be more rewarding when you smartly leverage the tax provisions under Sections 80C, 24(b), 80EE, and 80EEA. These allow deductions on both interest and principal repayments. First-time buyers can save up to ₹4 lakh in interest deductions annually by combining these sections. Joint home loans offer an additional edge, allowing each co-borrower to claim separate benefits. To ensure full advantage, understand your loan structure, invest in affordable housing, and retain ownership for at least five years.
What Are Home Loan Tax Benefits?
Home loan tax benefits are deductions available under various sections of the Income Tax Act that reduce your taxable income. These are designed to promote homeownership by easing the financial burden of loan repayment. You can claim deductions on both the interest and principal components of your EMI, resulting in significant yearly savings. These benefits apply to self-occupied, rented, and even under-construction properties, making them a valuable tool in long-term financial planning.
Key Sections Offering Home Loan Tax Benefits
Understanding the different sections under the Income Tax Act can help you make the most of your home loan deductions:
1. Section 80C – Deduction on Principal Repayment
You can claim up to ₹1.5 lakh per financial year for the principal portion of your home loan EMI. This benefit is available only if the property is not sold within five years from the date of possession.
2. Section 24(b) – Deduction on Interest Paid
For self-occupied properties, you can claim up to ₹2 lakh annually on the interest paid. If the property is rented out, there's no upper limit on interest deduction, but the total loss from house property that can be set off is capped at ₹2 lakh.
3. Section 80EE – Additional Deduction for First-Time Buyers
First-time homebuyers can claim an additional deduction of ₹50,000 on interest paid, over and above the Section 24(b) limit, under Section 80EE. To qualify, the home loan must have been sanctioned between April 1, 2016, and March 31, 2017. Additionally, the loan amount should not exceed ₹35 lakh and the property's value should be ₹50 lakh or less. Balance transfers (BT) are permitted in subsequent years without affecting the eligibility for this deduction.
4. Section 80EEA – Deduction for Affordable Housing
Section 80EEA offers an additional deduction of up to ₹1.5 lakh on interest paid for loans taken for affordable housing. To avail of this benefit, the stamp duty value of the property must not exceed ₹45 lakh, and the loan must have been sanctioned between April 1, 2019, and March 31, 2022. Balance transfers (BT) can be done in any subsequent year without impacting the deduction eligibility. This provision is particularly beneficial for first-time buyers of budget-friendly homes.
Also Read - Union Budget 2025 Key Highlights and Income Tax Changes
How to Maximize Home Loan Tax Benefits
1. Understand Your Loan Components
Your home loan EMI consists of two parts—principal and interest. Knowing how much goes toward each helps you claim appropriate deductions under different sections like 80C and 24(b).
2. Utilize Multiple Sections
Combine benefits under Sections 80C, 24(b), and 80EE or 80EEA. For example, a first-time homebuyer can claim up to ₹4 lakh in interest deductions by combining multiple sections.
3. Joint Loans for Higher Benefits
Taking a joint home loan? If both borrowers are co-owners and contribute to repayments, each can claim deductions individually—doubling the tax-saving potential.
4. Invest in Affordable Housing
Affordable housing not only eases your purchase but also brings added tax benefits under Section 80EEA, encouraging smart financial planning.
5. Plan for Long-Term Ownership
To retain benefits under Section 80C, don’t sell your property within five years of possession. Long-term ownership secures both your savings and stability.
Home Loan Tax Benefits for Under-Construction Properties
You can claim deductions on the interest paid during the construction period under Section 24(b). The interest accumulated during this phase can be claimed in five equal installments once the construction is completed. This helps you save on taxes while your property is still under development.
The Role of Grihum Housing in Simplifying Your Home Loan Journey
At Grihum Housing Finance, we’re committed to making your homeownership journey seamless. From easy digital applications to customized loan solutions and transparent processes, we ensure you get the right support at every step. With expert guidance and quick approvals, owning your dream home is now simpler and more rewarding.
Why Choose Grihum Housing Finance?
Grihum stands out for its customer-first approach and deep understanding of affordable housing needs. We offer competitive interest rates, flexible loan options, and minimal documentation to make your loan journey hassle-free. Our user-friendly tools like EMI calculators and eligibility checkers help you plan better, while our dedicated support team ensures personalized guidance throughout the process. Choose Grihum for trust, transparency, and tailored financial solutions.
Also Read - Understand your home loan eligibility criteria?
Tips for first-time home buyers
Buying your first home is a big milestone—make it smoother with these smart tips. Start by checking your loan eligibility using online tools and maintain a good credit score to secure better interest rates. Understand the components of your home loan—principal and interest—to plan your tax savings wisely. Choose a repayment tenure that balances your EMIs and long-term affordability. Explore government schemes and tax benefits like Sections 80C, 24(b), and 80EEA for maximum savings. Lastly, partner with a trusted lender like Grihum Housing Finance for a transparent, supportive loan journey tailored to your needs.
Conclusion
A home loan is more than just a step towards owning a house—it’s an opportunity to build financial stability while enjoying substantial tax savings. By understanding key sections like 80C, 24(b), 80EE, and 80EEA, and strategically planning your loan, you can significantly reduce your tax burden year after year. Whether you’re a first-time buyer or investing in affordable housing, these benefits are designed to ease your journey. At Grihum Housing Finance, we’re dedicated to helping you make the most of these advantages through expert guidance, flexible loan solutions, and a smooth digital experience. Take the next step toward your dream home—smartly, confidently, and with Grihum by your side.
FAQs
1. What is the tax benefit for first-time homebuyers?
First-time homebuyers can enjoy combined benefits under Sections 80C, 24(b), and either 80EE or 80EEA, depending on the loan sanction date and property value. This can result in total annual deductions of up to ₹4 lakh on interest and ₹1.5 lakh on principal, offering significant tax savings and support for affordable homeownership.
2. What are the tax benefits of affordable housing scheme?
Under Section 80EEA, homebuyers purchasing affordable housing (stamp duty value up to ₹45 lakh) can claim an additional deduction of up to ₹1.5 lakh on home loan interest. The loan must be sanctioned between April 1, 2019 and March 31, 2022. Balance transfers are allowed later without losing eligibility. This benefit especially supports first-time buyers of budget-friendly homes.
3. Can I claim 80EEA every year?
Yes, once eligible under Section 80EEA, you can claim the deduction every financial year until the home loan is repaid. The annual deduction is up to ₹1.5 lakh on interest, and it continues as long as the loan conditions and ownership remain unchanged.
Note: To get full detailed information about the said sections and criteria for eligibility, you may consult your Tax Advisor or refer Income Tax Act
