What Are The Tax Benefits On Home Loan

Buying a home is a major life goal. For many of us, it’s a dream that takes years of saving and planning. A home loan can help turn this dream into a reality, and that too without draining your entire savings. But there’s more to it than just getting your own space. A home loan also opens doors to valuable tax benefits, helping you save money while you repay. 

If you’re considering a home loan in Chandigarh or exploring your options through the city’s best home loan facilitator, understanding the tax advantages that come with it can help you make better financial choices. 

Here’s a simple, structured guide from BankEMI to everything you need to know about home loan tax deductions in India.

Save While You Repay: Key Tax Benefits

The government provides several tax deductions to encourage people to buy homes. These benefits fall under a few key sections of the Income Tax Act: 

1. Section 80C: Deduction on Principal Repayment

You can claim up to ₹1.5 lakh every year for the principal amount you repay on your home loan. This benefit is available for both self-occupied and rented properties.

However, the catch is that this deduction is a part of the larger Section 80C bucket. That means your other expenses like life insurance premiums, Public Provident Fund (PPF), and ELSS investments also fall under the same limit.

To be eligible, the house must not be sold within five years of possession. If you do, the deduction gets reversed. 

2. Section 24(b): Deduction on Interest Paid

This is where you get a big tax break. Under Section 24(b), you can claim up to ₹2 lakh per year on the interest you pay for your home loan, if the property is self-occupied. 

For a let-out property (like one you rent to tenants), there is no cap on the interest deduction. But remember, the overall loss that can be set off under the ‘income from house property’ is capped at ₹2 lakh.

Also, if your home is under construction, the interest paid during this time can be claimed in five equal instalments once the construction is complete. 

3. Section 80EE: Additional Deduction for First-Time Buyers

If this is your first home and you meet certain criteria, you can claim an extra ₹50,000 per year under Section 80EE. The main conditions are:

• The loan must be sanctioned between specific financial years. 
• The home’s value must not exceed ₹50 lakh.  
• The loan amount must not be more than ₹35 lakh. 

This is a great bonus for new buyers who want to reduce their overall tax burden.

4. Section 80EEA: Affordable Housing Advantage 

Introduced as an extension to help first-time buyers, this section allows an additional ₹1.5 lakh deduction on interest paid. However, it only applies if you’re not claiming benefits under Section 80EE.

This benefit is especially useful if you’re buying a budget-friendly home under the government’s affordable housing scheme. 

Real Savings Example

Let’s say you take a home loan of ₹40 lakh at 8% interest for 20 years. You repay around ₹3.5 lakh in the first year, ₹2.9 lakh as interest and ₹60,000 as principal. 

Here’s how your tax benefits could look: 

• ₹1.5 lakh claimed under Section 80C (if you use it for principal repayment)
• ₹2 lakh claimed under Section 24(b) 
• ₹50,000 under Section 80EE or ₹1.5 lakh under Section 80EEA (if eligible) 

In total, you could save over ₹4 lakh in taxes in just the first year!

Budget 2025: What’s New?

This year’s Union Budget kept home loan deductions unchanged but focused more on affordable housing. It extended benefits under Section 80EEA and also gave a push to digital loan processing for transparency and speed; good news for those exploring home loan consultants.

While the deduction limits haven’t increased, the government’s continued support for housing shows that tax benefits on home loans are here to stay. 

Conditions to Keep in Mind

Tax benefits are great but only if you qualify. Here are a few important things to note: 

• You can only claim tax deductions after the construction of the property is complete.
• The house must be in your name. If it’s a joint loan, both co-borrowers can claim deductions individually.
• Keep all your home loan documents, including the interest certificate from the lender.
• If you rent out the property, inform your lender and update your income tax filings accordingly. 

How BankEMI Helps You Make the Most of Your Loan

BankEMI is not just a business loan facilitator, we also help you get the best home loan in Chandigarh and tri-city area. 

We connect you with trusted lenders offering competitive rates, and guide you through the entire loan process. But more than that, we help you understand how your loan fits into your long-term finances, including how to claim the right tax deductions. 

We’re also one of the few instant loan facilitators in Chandigarh offering quick pre-approvals and seamless customer support. 

Whether you’re a salaried individual or a self-employed professional, BankEMI simplifies your loan journey and maximises your savings. 

Final Thoughts

Taking a home loan is a big step, but knowing the tax benefits makes it a smart move. You not only build a valuable asset, but also save lakhs in taxes over the loan tenure. And if you’re looking for a home loan in Chandigarh or need guidance from home loan experts, BankEMI is here to help. 

Start your journey with confidence. Let BankEMI guide you through the smart way to own a home and save while doing it.

Apply now or talk to a loan expert today.