How To Claim Home Loan Tax Benefits In India Under Section 80C & 24?

Table of Contents

Introduction

If you have a home loan, knowing how to claim home loan tax India benefits under Section 80C benefits and Section 24 can save you crores across the loan tenure. In this guide, we’ll break down carefully how to avail deductions on principal and interest, map your tax strategy, and avoid common mistakes—all explained in a simple, human-friendly style.

1. What Home Loan Tax Benefits Can You Claim?

✅ Section 80C: Principal Repayment

You can claim up to ₹1.5 lakh per year under Section 80C, covering principal repayment, stamp duty and registration fees combined.
This is part of a larger 80C limit that also includes PPF, ELSS, and insurance—choose wisely to maximize benefit.
Claim is possible only after property possession and must remain unsold for at least 5 years; otherwise, benefits are reversed.

✅ Section 24(b): Interest Payment

Interest paid on loans for self-occupied property is eligible for deduction up to ₹2 lakh per year.
For let-out (rental) property, there’s no cap on interest deduction; however, tax relief is limited to ₹2 lakh per year, and unused losses can be carried forward for up to 8 years.

2. Extra Benefits for First-Time Buyers

Section 80EE: Additional deduction of up to ₹50,000 per year on interest for loans sanctioned between Apr 2016 – Mar 2017. Property cost ≤ ₹50 lakh and loan amount ≤ ₹35 lakh apply.
Section 80EEA: Extra ₹1.5 lakh deduction for interest on affordable housing loans sanctioned by Mar 2022, on properties worth ≤ ₹45 lakh.

3. How Joint Home Loans Double Your Advantage

When spouses or family members co-borrow:
- Each can claim ₹1.5 lakh under 80C and ₹2 lakh under 24(b) if self-occupied.
- For let-out property, both can claim interest separately, though tax-setoff is capped at ₹2 lakh each, and 80C benefit doubles too.

4. Claiming Deductions on Under-construction Property

During construction, you can’t claim principal repayment.
However, interest paid during pre-construction can be claimed in 5 equal installments starting the year you take possession, under the ₹2 lakh annual cap.

5. Claiming in New vs Old Tax Regime

Old Regime: Full benefits under both Section 80C and 24(b) apply.
New Regime: Only interest paid on let-out property can be claimed (up to net rental income). No principal repayment benefit under 80C or interest on self-occupied homes.
Use a break-even analysis comparing deductions vs slab rates before choosing regimes.

6. Steps to Maximise Your Tax Benefits

Submit home loan interest certificate and principal payment proof to your employer or include them when filing ITR.
Plan principal repayment and other 80C investments to fully utilise your ₹1.5 lakh limit.
For self-occupied property, ensure annual interest hits the ₹2 lakh cap to maximise savings.
Claim pre-construction interest over 5 years after possession, tracking carefully.
In joint loans, split EMI contributions and ownership proportionately to claim double benefits.
Keep records of loan documents, certificates, registration receipts—especially now, detailed evidence is compulsory under ITR filing rules.

7. Real-Life Examples

Example 1: Young couple in Bangalore

Loan amount: ₹50 L, interest 8% → ₹4 L interest per year.
80C claim: ₹1.5 L; 24(b) claim: ₹2 L; excess interest on ₹3 L unclaimed.
Joint loan: Both spouses claim individually → total benefit ₹7 L.

Example 2: First-time buyer in Pune

Loan taken in 2021 for ₹40 L property.
Claims ₹50k under 80EEA + ₹2 L (Section 24) + ₹1.5 L (80C) = ₹4 L tax deductions.

8. Smart Tips to Maximise Benefits

Opt for shorter EMI tenure: Higher early interest → larger deductions early on.
Ensure timely possession: To start claiming under Section 24 and 80C.
Consider letting out property: All interest becomes deductible; rental loss can be carried forward.
Track limit-use: If you don’t use full ₹1.5 L on principal, invest remainder in PPF, ELSS, or NPS under 80C.

9. Common Mistakes to Avoid

Claiming deductions under the new tax regime for self-occupied home loan interest (not allowed).
Selling property within 5 years—previous 80C claims get added back to income.
Missing joint EMI splits—co-borrowers must contribute from their own accounts to claim benefit.
Duplicating 80C claims—stamp duty and insurance repayment counted toward 80C total.

10. Documentation Checklist

Loan interest certificates 📄
Principal repayment statements / EMI sections
Stamp duty and registration receipts
Proof of property possession
Ownership document (especially for joint loans)
Pre-construction interest statements

Conclusion

When used well, home loan tax India benefits under Section 80C benefits and Section 24(b) can significantly reduce your tax outgo—especially when combined with benefits for first-time home buyers and joint loans. Plan your EMI tenure, keep good records, and pick the right tax regime. You can unlock savings worth lakhs over the years—helping you buy smarter, save more, and achieve stability faster.

Source : fulinspace.com