Home Loan Tax Benefits Explained: Section 80C and 24(b)

A home loan can lower your income tax, but the benefit depends on the tax regime you choose. Here is the simple version. Always confirm your own case with a tax adviser.

Under the old tax regime

• Section 80C – principal repaid: the principal part of your EMIs counts towards the overall 80C limit of ₹1.5 lakh a year (shared with PF, PPF, insurance and others). Stamp duty and registration paid in the year of purchase can also be claimed within this limit.
• Section 24(b) – interest paid: for a self-occupied home, interest up to ₹2 lakh a year can be deducted.

Under the new tax regime

The new regime has lower slab rates but removes most deductions. Deductions under 80C and the 24(b) interest deduction for a self-occupied house are generally not available. For a let-out property the rules differ. Compare both regimes every year before choosing.

Joint home loans

If a husband and wife are both co-owners and co-borrowers and both pay the EMI, each can claim the deductions separately within their own limits under the old regime. This can nearly double the household benefit.

Under-construction property

Interest paid before you get possession can be claimed in five equal parts starting from the year construction is completed, within the same yearly limit.

Keep these papers

• Yearly interest and principal certificate from the lender.
• Property registration papers.
• Possession letter for an under-construction home.