All Home Loans Tax Benefits In India for 2024

Buying a home and being a homeowner is one of the biggest dreams for many Indians. And to make that dream come true for as many citizens as possible, the government of India offers a lot of benefits, including income tax benefits on home loan

Since a home loan is a long-term financial tool, you can enjoy the tax benefits for a longer period and reduce your overall annual tax liability. As per the Indian Tax Laws, the home loan amount you repay to the lender, i.e., both the principal amount and the interest amount, is eligible for deduction under Section 80C and Section 24 of the Indian Income Tax Act.

So, if you are planning to apply for a home loan soon, you must be aware of the different home loan tax benefits so that you can take advantage of it and reduce your tax burden. But first, let us understand the home loan process.

 

What is a home loan?

A home loan is a form of secured credit that you can avail from any financial organisation, i.e., a bank or an NBFC (non-banking financial company), to purchase your dream home. Typically, the lenders offer about 70% to 80% of the property’s value as a loan.

You can repay the amount in smaller instalments over a period of up to 30 years. But, if you have surplus funds, you can prepay the loan partially or in full without any additional charges, provided you have availed the loan on a floating interest rate basis.

 

Tax benefits on home loan

Many first-time home loan borrowers feel confused about how much tax benefit on home loans they can get. Well, the following table gives you a quick preview of the tax benefits on home loans:

Section under the Income Tax Act	Deduction Component	Maximum Tax Deduction Amount
Section 24	Interest amount repayment	Rs. 2 Lakh per annum
Section 80C	Principal amount repayment	Rs. 1.5 Lakh per annum
Section 80EE	First-time home loan borrower	Rs. 50,000

 

 

Tax benefit on repaying the principal amount

When you repay the home loan EMI (equated monthly instalments), it consists of two components – the principal and the interest amount. The principal amount you repay every month for a self-occupied home, you can claim a deduction for it under Section 80C of the IT Act. The maximum deduction you can claim here in a financial year is Rs. 1.5 Lakh. Also, under the same section, you can claim tax benefits on the property registration charges and the stamp duty you pay at the time of buying the house. However, you can claim this deduction only once in the same financial year of buying the home.

 

Tax benefit on repaying the interest amount

Home loan tax benefit is not limited only to the principal amount repayment. You can also claim a deduction of up to Rs. 2 Lakh in financial on repaying the home loan interest under Section 24 of the Indian Income Tax Act.

If you have a second home that is not occupied, the total tax benefit you can claim on the home loan for both properties is capped at Rs. 2 Lakh. If you have rented out one of the houses, there is no maximum limit on claiming the tax benefit on the interest. However, the income you get from rent is taxable as per the existing tax laws.

 

Additional tax benefit on home loan

If you have availed of a home loan during the financial year 2016-17, you are eligible to get an additional tax benefit of up to Rs. 50,000 under Section 80EE of the Indian Income Tax Act. You can enjoy these income tax benefits on home loans over and above the tax benefits under Section 80C and Section 24. However, to get this benefit, you must meet the following criteria:

• You must be a first-time home buyer

• The home loan amount you borrow should not be more than Rs. 35 Lakh

• The value of the property you purchased should not exceed Rs. 50 Lakh

 

Tax benefit on joint home loan

If you avail of a joint home loan with your spouse or any other immediate family members, both of you can individually claim tax benefits of Rs. 2 Lakh on interest payment under Section 24(b) and Rs. 1.5 Lakh on principal amount payment under Section 80C.

Thus, when you take a joint home loan, you can enjoy double tax benefits. However, to enjoy this benefit, both of you must be joint owners of the property and contribute to the EMI repayment.

 

Conclusion

As home loan borrowers, you must be aware of the tax benefits available to you as guaranteed by the Income Tax Act. Availability of these benefits is a great way to reduce your overall tax burden and maximise your savings.