Tax benefits on Home Loan repayment

Tax benefits on Home Loan repayment

Many customers take home loan for their dream home. We know the tax benefits associated with Home loan. In this post, I will explain on Home loan tax benefits. I will also cover facts that are not known to a majority of people.


To understand the key tax benefit on home loan, the repayment techniques are divided into three major elements-

·         Tax benefits on principal repaid under section 80c,

·         Tax benefits on interest paid under section 24b and

·         Section 80EE income tax benefits.


Tax benefits on principal repayment under section 80c:

The maximum tax deduction limit allowed under Section 80C claimed is Rs. 1, 50,000.

The tax benefit is allowed only after the construction has been completed and the completion certification received by the taxpayer.

The deduction on the home loan, under this section, is allowed if the loan is sought for the extension and renovation of a house.

Stamp Duty & Registration Fee is also allowed as tax deduction under Section 80C even if the Assessee has not taken Loan.

Tax benefit of home loan under this section 80c for repayment of principal part of the home loan is allowed only after the construction is completed and the completion certificate has been awarded.


Tax benefits on Interest repayment under section 24b:

The maximum tax deduction limit allowed under Section 24 claimed is Rs. 2, 00,000.

Payment of Interest on Home Loan is allowed as a deduction under Section 24 of the Income Tax Act. According to Section 24, the Income from House Property shall be reduced by the amount of Interest paid on Home Loan where the loan has been taken for

  • Purpose of Purchase
  • Purpose of Construction
  • Purpose of Repair
  • Purpose of Renewal

Upto Rs 30,000 if loan was taken on or after 1 April 1999, and is construction of the house is not completed within three years from the end of the previous year in which loan was taken.


Tax benefit under section 80EE

Interest for pre construction/acquisition period is allowable in 5 equal installment beginning from the year of completion of house property. This deduction is not allowable if the loan is utilized for repairs, renewal or reconstruction.


Difference between Section 24b and Section 80C


Only the person who has constructed or acquired the property can enjoy tax benefits. This benefit is allowed to its successor of the property.

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