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F-14/15, Orbit Mall, Civil Lines, Jaipur-302006 support@thetaxheaven.comOwning a house is not only a dream for most Indians but also a smart financial investment. To make this dream more affordable, the government of India offers tax benefits on home loans. If you are a salaried professional or a self-employed individual paying EMIs, you can claim deductions on both home loan principal and interest payments under the Income Tax Act.
Understanding how to claim these benefits can significantly reduce your tax liability while also helping you build an asset. In this article, we’ll explain how to claim tax benefits on home loan interest in India, the relevant sections of the Income Tax Act, eligibility, documentation, and some smart tips to maximize deductions in 2025 and beyond.
A home loan EMI has two components:
Principal Repayment – The amount that reduces your outstanding loan balance.
Interest Payment – The cost you pay to the bank or lender for borrowing money.
Both components qualify for tax benefits but under different sections of the Income Tax Act.
Section 80C – Deduction on principal repayment (up to ₹1.5 lakh annually).
Section 24(b) – Deduction on interest repayment (up to ₹2 lakh annually).
Section 80EE / 80EEA – Additional deductions for first-time homebuyers.
Under this section, you can claim a deduction of up to ₹2 lakh per financial year on interest paid for a self-occupied property. If the property is rented, there is no upper limit on interest deduction (though the overall loss set-off from house property is capped at ₹2 lakh).
The loan must be taken for the purchase, construction, or repair of a house.
Construction should be completed within 5 years from the end of the financial year in which the loan was taken.
Deduction is available on an accrual basis (i.e., as the interest is due, not when paid).
Deduction available up to ₹1.5 lakh annually.
Includes principal repayment and stamp duty/registration charges (in the year they are incurred).
Applies only to loans taken for purchase or construction of a residential property.
Selling the property within 5 years of possession reverses the deduction (amount claimed earlier is added back to your taxable income).
Deduction up to ₹50,000 annually on home loan interest.
Applicable if:
Loan sanctioned between 1st April 2016 and 31st March 2017.
Loan amount ≤ ₹35 lakh.
Property value ≤ ₹50 lakh.
Buyer does not own any other house property at the time of loan sanction.
Deduction up to ₹1.5 lakh annually on interest.
Applies if:
Loan sanctioned between 1st April 2019 and 31st March 2022.
Property value ≤ ₹45 lakh.
Buyer does not own any other residential property.
Note: Both Section 80EE and 80EEA cannot be claimed together.
Your lender (bank or NBFC) will provide a Home Loan Interest Certificate, which clearly mentions the split between principal and interest components for the financial year.
Principal → Claim under Section 80C.
Interest → Claim under Section 24(b), and if eligible, under 80EE/80EEA.
If you are a salaried individual, submit the interest certificate and property documents to your employer so they can adjust TDS accordingly.
If you missed submitting proofs to your employer, you can still claim deductions while filing your ITR before the due date.
Let’s assume you took a loan of ₹40 lakhs in 2022 at 8% interest for 20 years.
Interest Paid (2025): ₹3,10,000
Principal Paid (2025): ₹1,25,000
Now, tax benefits you can claim:
Section 24(b): ₹2,00,000 (interest deduction limit)
Section 80C: ₹1,25,000 (principal repayment)
Total Deduction: ₹3,25,000
If you fall in the 30% tax bracket, you save:
₹3,25,000 × 30% = ₹97,500
Joint Home Loans
Both co-owners can claim deductions individually.
Example: Husband and wife as co-borrowers can claim ₹2 lakh each on interest.
Under-Construction Property
Interest paid during construction can be claimed after possession in 5 equal annual installments under Section 24(b).
Principal repayment under Section 80C is not allowed until construction is complete.
Second Home Loan
If self-occupied, you still get deduction of ₹2 lakh on interest.
If rented, entire interest is deductible (with ₹2 lakh set-off cap against other income).
Opt for a joint home loan with a spouse or parent to double deductions.
Ensure you complete property construction within 5 years to avail full benefits.
Keep all loan statements, possession certificates, and registration papers handy.
Choose loans that qualify under affordable housing schemes to claim extra benefits.
File your ITR on time to avoid missing deductions.
Q1. Can I claim both principal and interest repayment as deductions?
Yes, you can claim principal repayment under Section 80C (₹1.5 lakh) and interest repayment under Section 24(b) (₹2 lakh).
Q2. Can I claim home loan benefits if the property is still under construction?
You can’t claim principal repayment, but interest paid can be accumulated and claimed in 5 equal installments from the year of possession.
Q3. Is stamp duty and registration fee eligible for tax deduction?
Yes, under Section 80C, but only in the year these expenses are incurred.
Q4. What if I sell the property within 5 years of purchase?
Deductions claimed on principal repayment will be reversed and added back to your taxable income.
Q5. Can both husband and wife claim tax benefits on a joint home loan?
Yes, if both are co-owners and co-borrowers, they can claim deductions separately.
Q6. Can I claim tax benefits on a second home loan?
Yes, but the interest deduction for self-occupied property is capped at ₹2 lakh in total.
Q7. Can NRIs claim tax benefits on home loans in India?
Yes, NRIs can claim deductions under the same sections as resident Indians.
Q8. Do I need to submit home loan documents every year?
Yes, salaried employees must submit them to employers annually for TDS adjustments.
Q9. What is the maximum deduction I can claim on home loan interest?
For self-occupied property, ₹2 lakh per year under Section 24(b).
Q10. Can I claim deduction under both Section 80EE and 80EEA?
No, you can claim benefits under only one section at a time.
A home loan is more than just financial assistance—it’s a powerful tax-saving tool. By understanding how to claim tax benefits on home loan interest in India, you can save a significant amount while building your dream home.
To maximize your savings in 2025 and beyond:
Claim deductions under 80C, 24(b), and 80EE/80EEA wherever eligible.
Opt for joint loans if possible.
Keep documentation ready and file your ITR carefully.
By making informed decisions, you not only reduce your tax burden but also take a step closer to long-term financial stability.
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