Quick Answer: Home loan tax benefits under Income Tax Act: Section 24(b) — up to ₹2 lakh deduction on interest for self-occupied property (under Old Regime); Section 80C — principal repayment up to ₹1.5L limit; Section 80EEA — additional ₹1.5L interest deduction for first-time buyers (affordable housing, loan sanctioned by 31 March 2022). Under New Tax Regime, no home loan deductions except employer NPS.
Home Loan Tax Benefits — Complete Guide
Home loans are among the best tax-saving instruments in the old tax regime. A borrower can claim deductions on both interest paid (Section 24b) and principal repaid (Section 80C). Together, these can save lakhs of rupees in tax each year.
Applicable Sections
| Section | Benefit | Max Deduction | Regime |
|---|---|---|---|
| Section 24(b) | Interest paid on home loan (self-occupied) | ₹2,00,000/year | Old only |
| Section 80C | Principal repaid (EMI principal portion) | Within ₹1.5L 80C limit | Old only |
| Section 80EEA | Additional interest (first-time, loan by Mar 2022) | ₹1,50,000/year | Old only |
Frequently Asked Questions
Section 80EEA allows an additional ₹1.5L deduction on home loan interest beyond the ₹2L Section 24(b) limit. Conditions: first-time buyer, loan sanctioned between April 1, 2019 and March 31, 2022, property value ≤ ₹45L, loan amount ≤ ₹35L. Not applicable for loans taken after March 2022.
Section 24(b) deduction for self-occupied property begins only after construction is complete and possession is obtained. For under-construction period, interest paid can be claimed in 5 equal instalments starting from the year of completion, but only under the old regime.