In 2024, home loan borrowers in India can still take advantage of various tax benefits under the Income Tax Act, 1961. These benefits can reduce your overall tax liability and encourage homeownership. Below is a detailed breakdown of the home loan tax benefits available in
2024:
1. Tax Deduction on Interest Paid (Section 24(b))
● Deduction Limit: ₹2,00,000 per year for self-occupied property.
● If the property is let out (rented), there is no upper limit on the interest deduction;
however, the total loss from house property that can be set off against other income
is capped at ₹2,00,000. Any remaining loss can be carried forward for up to 8 years.
● Interest deduction applies to loans taken for the purchase, construction, repair, or
reconstruction of the property.
● Construction or purchase must be completed within 5 years from the end of the
financial year in which the loan was taken to claim this benefit.
● Pre-construction interest: Interest paid during the construction period is also
eligible for deduction. It can be claimed in 5 equal instalments starting from the year
in which the construction is completed.
2. Tax Deduction on Principal Repayment (Section 80C)
- Deduction Limit: ₹1,50,000 per year under Section 80C.
● This deduction applies to the repayment of the principal component of the home loan.
● This benefit is available only for self-occupied properties and not for rental
properties.
● Important: To claim this benefit, the property must not be sold within 5 years of
possession. If sold, the deduction claimed under Section 80C will be reversed and
added to your income in the year of sale.
3. Tax Deduction for First-Time Homebuyers (Section 80EEA)
- Deduction Limit: ₹1,50,000 per year on the interest paid.
● This deduction is over and above the ₹2,00,000 limit under Section 24(b).
● Applicable for first-time homebuyers, provided the stamp duty value of the
property does not exceed ₹45 lakh.
● The loan must be sanctioned between April 1, 2019, and March 31, 2022. However,
this deadline might be extended in future budgets.
● This benefit is available for individuals, not HUFs or businesses.
4. Tax Deduction for Joint Home Loans
- Deduction Limit: ₹1,50,000 per year on the interest paid.
● This deduction is over and above the ₹2,00,000 limit under Section 24(b).
● Applicable for first-time homebuyers, provided the stamp duty value of the
property does not exceed ₹45 lakh.
● The loan must be sanctioned between April 1, 2019, and March 31, 2022. However,
this deadline might be extended in future budgets.
● This benefit is available for individuals, not HUFs or businesses.
5. Tax Benefit on Stamp Duty and Registration Charges (Section 80C)
- ● You can claim a deduction under Section 80C for the stamp duty and registration
charges you pay while buying the property.
● This deduction is part of the overall ₹1,50,000 limit under Section 80C and can only
be claimed in the year these expenses are incurred.
6. Additional Benefits under Affordable Housing Schemes
- If your home qualifies under affordable housing schemes like Pradhan Mantri Awas
Yojana (PMAY), you might also be eligible for government subsidies on interest
rates, further reducing the cost of the loan.
Summary of Key Tax Deductions:
| Section | Purpose | Deduction Limit |
|---|---|---|
|
Section
24(b)
|
Interest paid on home loan |
₹2,00,000 per annum (selfoccupied)
|
|
Section 80C |
Principal repayment
|
₹1,50,000 per annum |
|
Section
80EEA |
Additional interest for first-time
homebuyers |
₹1,50,000 per annum (subject to
conditions)
|
|
Section 80C |
Stamp duty & registration fees |
Part of the ₹1,50,000 limit under
Section 80C |
Conditions to Claim Tax Benefits
- The property must be purchased or constructed within 5 years from the end of
the financial year in which the loan was taken.
● You must be the owner or co-owner of the property to claim deductions.
● Pre-construction interest can only be claimed after the construction is complete.
● Tax benefits are available only for fully disbursed loans.
How to Claim These Deductions:
- You need to submit a home loan interest certificate provided by your lender. This
certificate details the principal and interest components of your EMIs.
● You will declare these amounts in your income tax return (ITR).
