Home Loan Tax Benefits

Check Housing Loan Tax Benefits under section 80C, 80EE/80EEA & 24

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While a housing loan can assist you in purchasing a home, it can also be an expensive endeavour. However, there are multiple home loan tax benefits that you can avail, allowing you to save money every year. This article will tell you about the various sections of the Income Tax Act of 1961 under which you can avail tax benefits for taking up a home loan. Read on to know more.

Latest Updates from Union Budget

  • New tax exemption was proposed for Affordable Rental Housing projects to make them accessible to migrant workers.

  • An additional ₹48,000 crore has been allocated to the Pradhan Mantri Awas Yojana (PMAY).

Tax Benefits on Home Loan (FY 2022-23)

The house loan tax benefits under the applicable sections of the Income Tax Act of 1961 are listed in the table below:

Income Tax Act

Maximum Deductible Amount

Section 80EE

Rs 50,000

Section 80C

Rs 1.5 Lakhs

Section 24

Rs 2 Lakhs

Home Loan Principal Deduction under section 80C

  • You can avail a tax deduction of up to ₹1.5 Lakhs every year on the principal component of your home loan. You can claim this deduction for a home loan taken for a property that either you are occupying or have rented out.

  • To be able to claim it, you should ensure that the property is fully constructed.

  • You should hold onto the house for at least 5 years to be able to claim the deduction. If you sell the home within 5 years, the deductions shall be reversed and will be counted as income for the year in which the sale is made.

Home Loan Interest Deduction under section 80EE

  • Under this section, you will be able to claim a tax deduction of up to ₹50,000 every year on the interest component of the home loan. Note that this can be availed over and above the ₹2 Lakhs deduction you can avail under Section 24(b).

  • The value of the property must be less than ₹45 Lakhs.

Additional Tax Deductions Available Under Section 80EEA

  • If you availed a home loan between April 1, 2016, and March 31, 2017, you can claim a deduction of an additional ₹50,000 every year on it.

  • To do so, you must ensure that the home loan value is ₹35 Lakhs or less and the property value is under ₹50 Lakhs.

  • To avail this deduction, you must ensure that you were applying for the home loan in your name for the first time during the stipulated period.

Home Loan Tax Benefits under Section 24

  • Section 24 allows you to deduct the interest part of your housing loan EMI paid for the year from your total income up to a maximum of Rs. 2 Lakhs.

  • There is no maximum amount of interest that can be claimed on rented property.

  • However, the total loss that can be claimed under the heading of House Property is limited to Rs. 2 Lakhs. This deduction is available beginning with the year in which the house is constructed.

Joint Home Loan Tax Benefit

If two or more people take out a joint house loan, each of them is eligible for a deduction of up to Rs. 2 Lakhs on the interest paid. For amounts up to Rs. 1.5 Lakhs each, tax can be deducted on the principle paid. To be eligible for this deduction, all applicants must also be co-owners of the property. As a result, a shared home loan may provide you with more tax benefits.

Tax Benefit on Second Home Loan

Tax incentives are available on paying interest under current legislation. You are entitled to the full amount of interest paid. To help borrowers save more money on taxes, it has been proposed that the second self-occupied home can also be treated as a self-occupied home.

How to Claim Tax Benefits on Home Loans

It is straightforward to get tax benefits on a house loan. The processes to claim your tax deduction are outlined here.

  • Step 1: Determine the amount of the tax deduction to be claimed.

  • Step 2: Check to see if the house is registered in your name or if you are a co-borrower on the loan.

  • Step 3: Give your employer your house loan interest certificate to amend the tax deductible at source.

  • Step 4: If you do not complete the preceding steps, you will be required to file your tax return on your own.

  • Step 5: You are not required to submit these documents anywhere if you are self-employed. Simply keep them on hand in case the IT staff has any further questions.

How to Calculate Tax Benefits on a Home Loan

Using an online calculator to calculate your tax benefits on a home loan is the simplest method. Simply enter your house loan information and click calculate to see a complete tabulation. The following are the details you'll need in most cases:

  • Gross Annual Income Existing Deduction Under 80C/D

  • Loan Amount

  • Tenure

  • Interest Rate

  • Loan Start Date

Home Loan Tax Benefits FAQs

  • ✔️Is a Home Loan Top-Up Eligible for Tax Deduction

    If a top-up home loan is used for the acquisition, building, or renovation of a residential property, it is eligible for tax incentives under Section 80C and Section 24. You can split the EMI and get income tax benefits under Sections 80C and 24, respectively.

  • ✔️Is tax deduction on home loan interest allowed in 2022-23?

    Yes, tax deductions on house loan interest are allowed in 2022-23.

  • ✔️Is it possible to claim tax deductions under both Sections 80EE and 24?

    If a person meets the requirements of both sections, Section 24 and Section 80EE, he or she is eligible for benefits under both. To commence the same, the person must first exhaust the Section 24 limit before claiming the further benefit under Section 80EE.

  • ✔️What are the tax deductions on a joint home loan?

    In their Income Tax Return, each co-owner who is also a co-applicant in the loan can claim a maximum deduction of Rs 2,00,000 for interest on the house loan. The entire interest paid on the loan is divided among the owners in proportion to their stake in the company. It goes without saying that the borrowers' total interest claim cannot exceed the total interest paid on the loan.

  • ✔️Who can take advantage of house loan tax deductions?

    Tax benefits are available to the property owner. If the spouse is a co-borrower, they are also eligible for tax benefits. In the case of a joint loan, each co-owner has the right to sue for their share of the property.

  • ✔️The property I purchased with a home loan is still under construction. Can I claim tax benefits?

    You won't be able to claim tax deductions until the construction is finished. You can claim an aggregate of interest paid for the period prior to gaining possession after it's finished. This can be claimed in five equal instalments beginning with the year the construction is finished.

  • ✔️Is my spouse eligible for an income tax deduction in case we purchase a home together?

    Yes, in case the partner is employed with a different source of income, you can claim separate deductions on your tax forms. You can both deduct up to Rs. 1.50 Lakhs from your total income under Section 80C. If the house is jointly owned, each co-owner can claim interest on borrowed money deductions of up to Rs. 2 Lakhs.

  • ✔️What is the maximum amount tax-deductible for a Home Loan?

    An individual can claim a tax deduction of up to Rs. 2,00,000 for interest payments on a house loan under Section 24 of the Income Tax Act.