Home Loan EMI Tax Benefits: Maximize Savings with These 5 Key Tips While Filing Your ITR

Home Loan EMI Tax Rebate: Save Lakhs with These Tax Filing Tips

If you’re currently repaying a home loan, there’s good news—your Equated Monthly Installment (EMI) could unlock major tax savings. With the Income Tax Return (ITR) filing deadline approaching, now is the right time to understand how different provisions under the Income Tax Act can help you reduce your taxable income and even earn a refund. Here’s a comprehensive guide to the tax deductions available on home loans and how to claim them while filing your ITR.

1. Claim Deduction on Principal Repayment Under Section 80C

Under Section 80C, you can claim a deduction of up to ₹1.5 lakh per year on the principal component of your home loan EMI. This section also covers other investments like Public Provident Fund (PPF), Equity Linked Saving Schemes (ELSS), and life insurance premiums, which collectively must not exceed the ₹1.5 lakh limit.

However, there's an important condition—if you sell the property within five years of possession, the deduction claimed earlier will be reversed and added to your taxable income in the year of sale. So, hold the property for at least five years to retain the tax benefit.

2. Interest on Home Loan Is Deductible Under Section 24(b)

In addition to the principal, the interest paid on your home loan qualifies for tax benefits under Section 24(b). You can claim a deduction of up to ₹2 lakh annually on the interest component if the loan is taken for a self-occupied property and the house is constructed within five years from the end of the financial year in which the loan was taken.

In case the property is rented out, there is no upper limit on the interest deduction—making it a significant tax-saving opportunity for landlords.

3. First-Time Homebuyers Get Extra Deduction Under Section 80EE

If you’re a first-time homebuyer, there’s an additional benefit under Section 80EE. You can claim an extra deduction of ₹50,000 annually on home loan interest, over and above the ₹2 lakh limit of Section 24(b). But there are certain conditions:

• The loan amount should be less than ₹35 lakh

• The property’s value should not exceed ₹50 lakh

• The loan should have been sanctioned between 1 April 2016 and 31 March 2017

4. Section 80EEA Offers ₹1.5 Lakh Extra Deduction (for Eligible Buyers)

Homebuyers who purchased their first house between 1 April 2019 and 31 March 2022 can claim another ₹1.5 lakh deduction under Section 80EEA. To be eligible:

• The stamp duty value of the house must be ₹45 lakh or less

• The buyer must not own any other residential property at the time of purchase

• This benefit is not available for loans taken in FY 2024–25 or beyond

This section was introduced to promote affordable housing and provides a massive benefit to first-time homebuyers.

5. Stamp Duty and Registration Charges Also Qualify for Deduction

Often overlooked, stamp duty and registration fees paid during the property purchase are also eligible for tax deduction under Section 80C, within the overall ₹1.5 lakh limit. However, this benefit can only be claimed in the same financial year the expenses are incurred. Also, if the property is sold within five years, the claimed deduction will be reversed.

Final Word

Buying a home on loan doesn’t just fulfill a dream—it opens up multiple avenues for tax savings. Sections 80C, 24(b), 80EE, and 80EEA offer significant deductions that can reduce your tax liability substantially. Make sure to gather all relevant documents like interest certificates from your lender and registration receipts before filing your ITR.

Smart tax planning can easily save you lakhs of rupees—just ensure you’re aware of the latest guidelines and make full use of the benefits available.