How to Claim Tax Benefits on Home Loans Under Sections 80C & 24(b)

Home loan tax benefits can turn a major financial commitment into a smart tax-saving opportunity. Under Sections 80C and 24(b) of the Income Tax Act, homeowners can claim deductions on both principal repayment and the interest component of EMIs. These provisions reduce the taxable income significantly while encouraging home ownership. With the latest Budget 2025 updates and clearer filing processes, claiming these deductions has become easier than ever for salaried individuals, self-employed taxpayers, and joint owners alike.

To claim tax benefits on home loans under Sections 80C and 24(b), taxpayers can avail deductions up to ₹1.5 lakh annually on principal repayment and ₹2 lakh per year on interest payments for self-occupied properties. The benefits differ based on the nature of the property, loan type, and completion status, making accurate filing crucial for compliance and maximum savings.

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Table of Contents

• Understanding Tax Benefits on Home Loans Under Sections 80C and 24(b) 

• Eligibility Criteria for Claiming Home Loan Deductions 

• Section 80C – Deduction for Principal Repayment 

• Section 24(b) – Deduction on Interest Paid for Home Loan 

• How to Claim Tax Benefits on Home Loans 

• Joint Home Loans – How Co-Borrowers Can Claim Deductions 

• Additional Deductions Under Sections 80EE and 80EEA 

• Is Home Loan Deduction Allowed in the New Tax Regime? 

• Common Mistakes While Claiming Home Loan Tax Benefits 

• Key Compliance Tips and Deadlines 

• Conclusion 

• FAQs

Understanding Tax Benefits on Home Loans Under Sections 80C and 24(b)

Home loans offer not just financial assistance for purchasing a property but also substantial tax savings under the Income Tax Act, 1961. Two primary sections—80C and 24(b)—cover these benefits. Section 80C allows deductions for the principal repayment of a home loan, while Section 24(b) provides relief on the interest paid. Together, these sections can help reduce taxable income by up to ₹3.5 lakh annually if the property and loan meet the eligibility criteria. These benefits encourage individuals to invest in property ownership while enjoying long-term tax savings.

Eligibility Criteria for Claiming Home Loan Deductions

To claim tax deductions on home loans, several conditions must be satisfied. The taxpayer must be both the owner of the property and a co-borrower of the loan. The loan should be taken from recognized financial institutions or banks, not private lenders. The construction or purchase of the property should be completed within five years from the end of the financial year in which the loan was sanctioned. For deductions under Section 80C, the property should not be sold within five years of possession, or the claimed benefits will be reversed.

Section 80C – Deduction for Principal Repayment

Under Section 80C, taxpayers can claim a deduction of up to ₹1.5 lakh annually for the principal portion of their home loan EMIs. This section also covers expenses such as stamp duty and registration charges, which can be claimed only once, in the year they are paid. The deduction is applicable only after the construction of the property is completed. However, if the property is sold within five years of possession, all benefits claimed under Section 80C are added back to taxable income.

Section 24(b) – Deduction on Interest Paid for Home Loan

Section 24(b) allows deductions on the interest portion of the home loan EMIs. For self-occupied properties, the maximum deduction is ₹2 lakh per financial year. For rented or let-out properties, there is no upper limit on the interest deduction; however, the overall loss from house property that can be set off against other income is capped at ₹2 lakh annually. If construction is not completed within five years from the end of the financial year in which the loan was taken, the deduction is restricted to ₹30,000 per year. Interest paid during the pre-construction period can also be claimed in five equal installments starting from the year the construction is completed.

How to Claim Tax Benefits on Home Loans

Claiming tax benefits on home loans requires accurate reporting and documentation. First, collect a detailed interest certificate and loan statement from your lender. These documents will show the principal and interest components separately. While filing your ITR, report the principal repayment under Section 80C and the interest paid under Section 24(b). Always cross-check property completion status and ensure compliance with conditions. Platforms like TaxBuddy simplify this process through AI-based validation and real-time accuracy checks that help taxpayers file without errors or missed deductions.

Joint Home Loans – How Co-Borrowers Can Claim Deductions

In the case of joint home loans, each co-borrower who is also a co-owner can claim deductions individually. The total benefits remain subject to the overall limits under Sections 80C and 24(b). Each borrower can claim up to ₹1.5 lakh for principal repayment and ₹2 lakh for interest payments, based on their share in the loan repayment. The ownership ratio and payment contribution should align with the claims made in the ITR to avoid disputes during assessment.

Additional Deductions Under Sections 80EE and 80EEA

Beyond Sections 80C and 24(b), certain taxpayers may qualify for additional deductions. Section 80EE allows first-time home buyers to claim an extra deduction of ₹50,000 on the interest paid, provided the loan amount does not exceed ₹35 lakh and the property value is within ₹50 lakh. Section 80EEA extends similar benefits up to ₹1.5 lakh for affordable housing loans sanctioned between specific financial years. These deductions are available only if the taxpayer does not claim benefits under Section 80EE for the same property.

Is Home Loan Deduction Allowed in the New Tax Regime?

Under the new tax regime introduced in Budget 2025, most exemptions and deductions, including Sections 80C, 80EE, and 80EEA, are not available. However, the deduction on interest paid under Section 24(b) for a let-out property continues to apply. Therefore, taxpayers opting for the old regime can claim full benefits on both principal and interest payments, while those under the new regime will lose these benefits. The choice between regimes depends on whether total deductions under the old system exceed the tax rate benefits under the new one.

Common Mistakes While Claiming Home Loan Tax Benefits

Many taxpayers fail to maximize their home loan tax benefits due to common errors. A frequent mistake is misreporting the principal and interest portions in ITR forms. Another is forgetting to claim pre-construction interest in equal installments. Selling the property within five years of possession leads to reversal of Section 80C benefits. Some taxpayers also claim deductions before construction is completed, which is disallowed. Maintaining proper loan statements and filing through trusted platforms like TaxBuddy prevents such mistakes and ensures compliance.

Key Compliance Tips and Deadlines

To claim home loan deductions efficiently, keep all records updated, including loan sanction letters, payment proofs, and possession certificates. File your ITR before the due date to avoid penalties and interest under Section 234F. Ensure that property completion status and ownership details match what is reported in your tax return. TaxBuddy’s expert-assisted filing ensures such compliance automatically, helping taxpayers avoid notices and missed deductions while securing maximum tax savings.

Conclusion

Claiming tax benefits on home loans under Sections 80C and 24(b) not only reduces tax liability but also encourages long-term financial planning. By meeting eligibility conditions, maintaining proper documentation, and choosing the right tax regime, taxpayers can maximize their benefits while staying compliant. TaxBuddy simplifies the process by offering both self-filing and expert-assisted plans that ensure accurate deductions and faster refunds.

For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.

FAQs

Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?

TaxBuddy provides flexibility through both self-filing and expert-assisted options. The self-filing plan is ideal for individuals who prefer to handle their tax returns independently with the help of AI-driven guidance and smart validation tools that minimize human error. The expert-assisted plan, on the other hand, connects users with certified tax professionals who manage the complete process—from document review to accurate ITR filing and submission. This dual option ensures that every taxpayer, whether a beginner or an experienced filer, can find the right level of support for their needs.

Q2. Which is the best site to file ITR?

The best site to file ITR depends on convenience, accuracy, and the level of support required. While the official Income Tax Department portal allows free filing, it can be complex for users unfamiliar with tax rules. Platforms like TaxBuddy offer an easier alternative with guided assistance, AI-based error checks, and automatic computation of deductions under sections like 80C and 24(b). This helps taxpayers file accurately and claim maximum benefits without worrying about compliance errors or delays.

Q3. Where to file an income tax return?

Income tax returns can be filed electronically through the government’s official e-filing portal or through authorized tax platforms like TaxBuddy. Filing online ensures faster processing, automatic validation of details, and quicker refunds. TaxBuddy’s interface simplifies the process even further by integrating your income, deductions, and investment data automatically, reducing manual entries and potential mismatches.

Q4. What is the maximum deduction available under Section 80C for home loans?

Under Section 80C of the Income Tax Act, taxpayers can claim a maximum deduction of ₹1.5 lakh per financial year for the principal repayment of a home loan. This also includes related expenses such as stamp duty and registration charges, which can be claimed once in the year they are paid. However, the property must not be sold within five years of possession; otherwise, the deductions claimed earlier will be reversed and added back to your taxable income in the year of sale.

Q5. How much interest can be claimed under Section 24(b)?

Section 24(b) allows a deduction on the interest paid on a home loan. For self-occupied properties, the maximum limit is ₹2 lakh per year, provided the construction is completed within five years from the end of the financial year in which the loan was taken. For rented or let-out properties, there is no upper limit on the interest deduction, although the overall loss that can be set off against other income is restricted to ₹2 lakh annually. Any remaining loss can be carried forward for up to eight assessment years.

Q6. Can both spouses claim tax benefits on a joint home loan?

Yes, if both spouses are co-borrowers and co-owners of the property, they can claim tax benefits separately on their share of the loan repayment. Each spouse can claim up to ₹1.5 lakh under Section 80C for principal repayment and up to ₹2 lakh under Section 24(b) for interest payments, based on their respective contributions. Proper documentation of ownership share and repayment proof is essential to avoid discrepancies during assessment.

Q7. Is pre-construction interest deductible under Section 24(b)?

Yes, pre-construction interest is deductible under Section 24(b) but only after the construction of the property is completed. The total interest paid during the pre-construction period can be claimed in five equal annual installments starting from the financial year in which construction is completed or possession is obtained. However, the total claim, including pre-construction interest, must not exceed the limit of ₹2 lakh for self-occupied properties.

Q8. What happens if the property is sold before five years?

If a taxpayer sells the property within five years from the end of the financial year in which possession was obtained, all deductions claimed earlier under Section 80C for principal repayment are reversed. These reversed deductions are added back to the total taxable income in the year of sale. However, the interest deduction under Section 24(b) is not reversed, as it represents an expense already incurred. Therefore, to retain full tax benefits, it is advisable to hold the property for at least five years.

Q9. Are stamp duty and registration fees covered under Section 80C?

Yes, stamp duty and registration fees paid during the purchase of a residential property qualify for deduction under Section 80C. However, these can be claimed only once and within the overall limit of ₹1.5 lakh. The deduction must be claimed in the same financial year in which the payment is made, and it applies only if the property’s construction or purchase is complete. These costs cannot be claimed again in future years or under any other section.

Q10. Is there a limit on interest deduction for rented properties?

For rented or let-out properties, there is no upper cap on the deduction for interest paid on a home loan under Section 24(b). However, the overall loss from house property that can be adjusted against other income sources, such as salary or business income, is limited to ₹2 lakh in a financial year. Any remaining unadjusted loss can be carried forward for up to eight years to offset future house property income.

Q11. How to claim these deductions in ITR through TaxBuddy?

Claiming deductions through TaxBuddy is simple and automated. After uploading your Form 16 or income details, the platform automatically identifies eligible deductions under Sections 80C and 24(b). The system calculates the allowable limits based on property type, ownership share, and completion status. For those opting for expert assistance, TaxBuddy professionals review the details, verify documents like loan statements and interest certificates, and ensure all claims comply with the Income Tax Act provisions before filing your return.

Q12. Can home loan tax benefits be claimed under the new tax regime?

Most home loan deductions, including those under Sections 80C, 80EE, and 80EEA, are not available under the new tax regime introduced under Section 115BAC. However, taxpayers can still claim interest deductions under Section 24(b) for rented or let-out properties. For self-occupied properties, this benefit is not applicable under the new regime. Therefore, individuals with significant home loan interest payments generally find the old tax regime more beneficial, as it allows comprehensive deductions on both principal and interest.