Tax Benefits on Home Loans

Buying a home with a loan offers more than just the joy of home ownership; it also brings several tax benefits. These deductions help reduce your taxable income and improve your cash flow.

Here are the key tax benefits for individuals who have taken a housing loan for residential property from recognized financial institutions:

Under Section 24 of the Income Tax Act:
The interest paid on a loan taken for the acquisition, construction, repair, renewal, or reconstruction of property is eligible for a deduction. The maximum amount deductible is ₹2,00,000 per year. This applies to both self-occupied and rented properties. There is no upper limit for the deduction on interest paid for rented properties.

Under Section 80C of the Income Tax Act:
You can claim a deduction of up to ₹1,50,000 on the principal repayment during the financial year. This section also covers stamp duty, registration fees, and other related costs incurred during the transfer of the property to your name. However, it is important to note that these deductions fall under the overall cap of ₹1,50,000 for Section 80C. This deduction does not apply to any expenses related to additions, alterations, renovations, or repairs made after the completion certificate is issued for the property.

These deductions can significantly reduce your taxable income and provide substantial savings while helping you manage home loan repayments efficiently.