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Be Aware Of These Home Loan Tax Incentives

The facility of a housing loan not only provides you with a large amount to help you buy or construct your home but even tax benefits.

Based on your eligibility, it is possible to get a significant amount to build or buy your abode.

You can also avail of some home loan tax incentives based on your loan repayments towards principal, interest and more.

In turn, home loan tax benefit let you enjoy considerable savings on your repayments.

Hence, it becomes important to be aware of housing loan tax perks. Let’s check them out in this post!

Housing loan tax perks that you can claim

  • Deduction for the payment of housing loan interest rate charges

The payment of the home loan EMI comes with two components, such as the principal and interest. The housing loan interest rate portion of the housing loan EMI paid for a year can be deducted from your income to the tune of up to Rs.2 lakh. This provision is available under section 24 of the Income Tax Act. It is for self-occupied housing properties, but there is no limit if the property is let out.

  • Deduction for the payment of home loan principal

The payment towards the principal component of the home loan EMI is allowed as per section 80C. A maximum of up to Rs.1.5 lakh is allowed. The condition to claim such home loan tax incentives is that the property should not be sold within 5 years of possession.

  • Deduction for the payment of stamp duty and registration charges

Other than claiming the repayment amount for interest and principal home loan EMI, it is also possible to enjoy a deduction for payment of stamp duty and registration charges. The maximum limit that you can enjoy under this is Rs.1.5 lakh. But, the only condition is that you can claim this deduction only in the year of occurrence of these charges.

  • Extra deduction allowed

You should also be aware of an additional deduction that you can enjoy under section 80EE. The maximum amount that you can claim under this is up to Rs.50,000. To ask for this deduction, the loan amount should be Rs.35 lakh or lower. Also, the cost of the home that you buy should not exceed Rs.50 lakh. Another condition is that the loan must be approved between 1st April 2016 and 31st March 2017.   

  • Deduction for joint home loan

Many people apply for a home loan jointly if they are short of eligibility and owing to other factors. But for doing that, home loan tax benefits could easily be claimed. If you avail of a home loan jointly, each of the loan borrowers can ask for a deduction. It is allowed for home loan interest rate component up to Rs.2 lakh. For principal repayment under section 80C, each of them can claim an amount of up to Rs.1.5 lakh. Hence, if you decide to avail yourself of housing finance jointly, you can enjoy more tax perks.

Vital points to know about home loan tax benefits

  • You need to take a certificate from your lender for being able to be eligible for tax deductions. You should keep in mind that only the interest amount is eligible for deduction and not the principal amount.
  • For a second property that is self-occupied, you won’t be able to add any notional rent to the taxable income. But, it will be applicable only up to 2 homes. If in the case of a third home that is put on rent, it will levy tax. It has to be calculated at the expected rent of the market.
  • A total loss amount that you can adjust from your housing property is capped at Rs.2 lakh. Be it Salary or income from any other sources; the maximum amount is Rs.2 lakh.

You are now aware of housing loan tax incentives that you can claim are now discussed.

Based on your requirements and eligibility factors, you can get approval for a considerable amount.

For availing of the best home loan offers in India, you can compare all deals available online.

This facility is available in India on many third-party websites and free of cost. This way, one can pick an offer matching your needs and repayment capacity.  

Hi, I am smarat saini, I am professional financial analyst. Share some informative news and blogs here.


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