Home Loan Tax Benefits in India

Can you actually save taxes on your home loan in FY 2025-26? Guide to Sections 24(b), 80C & 80EEA Home Loan Tax Benefits in India, Ways To Cut Your Tax Bill By Utilising Sections 24(b), 80C, And 80EEA To lower your income tax liability, you may consider utilizing tax savings provisions such as sections 24(b), 80C, and 80EEA. Read to know more about FY 2025-26.

Click here to know How to Use Home Loans for Property Investment

Section 24(b): Home Loan Interest Deduction

Section 24(b) provides for a deduction of the interest component of your home loan EMI from your income under 'Income from House Property'.

• If property is self-occupied; the maximum deduction is Rs. 2,00,000 per financial year irrespective of actual interest paid.
• If property is let-out (rented); there is no limit on the interest that can be set off against the rental income of the property. However, if this leads to a loss (interest component exceeds rental income), the maximum Rs 2 lakhs loss can be set off against any other income (such as salary) in a financial year-the remaining loss is then carry forwarded.
• Pre-construction period; interest paid before taking possession can be claimed in five equal annual installments spread over the financial year of taking possession onwards, within the overall limit of Rs. 2,00,000 if the property is self-occupied.

Section 80C: Principal Repayment Deduction

Under Section 80C: The principal amount of the home loan, besides the stamp duty and registration charges during the year of purchase.

• Upper Limit: Rs 1.5 lakhs in a financial year. Important: This deduction is not limited to the home loan alone – it is for all the investments such as the PPF, ELSS funds, life insurance premium, NSC etc.
• The loan should be from any prescribed institution such as the bank or housing finance company, loans taken from relatives won't come under this section (although the interest can come under 24B subject to a certificate from the loan provider).

Section 80EEA: Extra Deduction for First-Time Affordable Housing Buyers

Section 80EEA additionally provides an extra 1,50,000 benefit on interests payable in excess of the2 lakhs under Section 24b but with some strict criteria:

• For loans sanctioned: Only during 1st April 2019 and 31st march 2022 which is closed, so buying now does not apply.
• Property's value: Only up to 45 lakhs as stamp duty value.
• Other homes: On the date loan sanctioned, you (and spouse) should not have heldany residential property .
• Not with 80EE: This section is not available if section 80EE(an older one which gave extra 50k on loan disbursed between April1,2016andMarch31,2017) was claimed or available for.
• Not for HUF: Individuals only are eligible; it's not available for HUF or other association .

If your loan doesn't fit these criteria, you miss out on these benefits, no doubt!

Quick Reference: Home Loan Tax Deductions at a Glance

Old Tax Regime vs. New Tax Regime: This Changes Everything

This is arguably the biggest factor deciding whether or not any of the above applies to you:

• Old Tax Regime: you continue to enjoy the benefit of all of the above: Section 24(b), 80C, 80EE, 80EEA.
• New Tax Regime (it is the default now for FY 2023-24 and also for FY 2025-26): The benefit for Section 24(b) on self-occupied property isn’t available at all. Benefit of Section 80C is unavailable at all.
• The ONLY way out: you can still claim the actual interest that you paid off on a property which you have let out, against rental income. Just that any resultant loss can’t be offset against your other income (salary) unlike the 2 Lakhset-off option available under the old scheme.

Rule of Thumb (approx): If your total house loan interest, principle and other deductions (80C, 80D, HRA and so on) combined exceed roughly 4 to 4.5 lakh per year, generally the old regime becomes cheaper than the new regime (despite having more slab rates), if it's below this amount the new regimes slabs become competitive. Calculate on tax calculator (This is an important financial calculation) before opting.

Joint Home Loans: Doubling Your Deduction

The claim on these deductions can be made individually for a jointly bought and jointly paid for house (both spouses as co-borrowers on loan): The claim should be in proportion of respective ownership and their EMI paid.

So in case both spouses own house in 50:50 ratio- each spouse can avail deductions up to Rs 2 lakh each under Section 24(b) and Rs 1.5 lakh each under Section 80C. Together they save taxes on up to Rs 7 lakh, which is twice compared to an individual owner claiming deductions.

What Changes Under the Income-tax Act, 2025

FY 2025-26 Return (Filed in 2026) You still follow the section numbers mentioned above (24(b), 80C, 80EE, 80EEA), since income till 31 March 2026 will still fall under the jurisdiction of Income-tax Act, 1961.

FY 2026-27 Onwards, The Income-tax Act, 2025 The current rates/ limits of deductions have not been changed, but simply renumbered. The ‘Income-tax Act’ now becomes ‘Income-tax Act, 2025’.

For example, section 80C in the current income tax Act would now be part of section 123 in the new income tax act.

Similarly house property interest sections would be part of the main structure of the new Income-tax Act. As such when you will prepare your Income tax return you will have to ensure all interest certificate issued by banks as well as your form16 indicates you have to enter particular value in which sections of the new income tax Act.

Final Thoughts

3 questions on home loan tax benefits: Section 24b, 80C and 80EEA. Your home loan can cut your tax liability substantially if you answer these three correctly: (i)Is it self-occupied or let out property? (ii) Are you under the new tax regime or the old one? And (iii) Is your loan qualifying under any of the (no longer applicable now)80EEAor80EE sanction regimes?

Frequently Asked Questions (FAQs)