How to Save Tax on Your Home Loan in India

Tax season is always around the corner, and with 2025’s updated deductions and benefits, maximizing your home loan tax savings has never been more crucial. Whether you're buying one of Pune's 4 BHK luxury flats, checking out residential projects in Baner, or exploring new projects in Pimple Nilakh, this guide will help you unlock every available deduction.

For FY 2025, claim tax savings on home loans through:

▶️ Section 80C: up to ₹1.5 lakh on principal + stamp duty and registration

▶️ Section 24(b): up to ₹2 lakh (self-occupied)

▶️ First-time buyers: extra ₹50k (80EE) or ₹1.5 lakh (80EEA)

▶️ Also consider HRA, joint loan benefits, and smart investment planning.

 

What is Section 80C and how does it help homebuyers?

Section 80C allows deductions for up to ₹1.5 lakh annually on principal repayment, including stamp duty and registration, within the same year incurred—only if the property isn't sold within 5 years. Use this strategically among other 80C avenues like PPF or insurance.

 

How does Section 24(b) benefit borrowers on interest paid?

Under Section 24(b), self-occupied properties let you deduct interest up to ₹2 lakh. For let-out properties, there's no cap. Pre-construction interest can be spread over 5 years post-completion.

 

What extra benefits do first-time homebuyers get?

 

 

▶️ Section 80EE: Extra ₹50,000 interest deduction for loans (≤₹35 lakh, property ≤₹50 lakh, loan sanction 2016-17). 

▶️ Section 80EEA: Up to ₹1.5 lakh extra deduction (loan 2019-22, property ≤₹45 lakh). 

 

How can you leverage HRA with a home loan?

Claiming HRA while paying home loan keeps filing neat—declare property as let-out or jointly occupied. Under the new tax regime, interest deduction on self-occupied properties isn’t allowed, but let-out property's interest still is.

 

What advantages do joint loans offer?

 

 

With a joint loan where both co-borrowers are property owners, both can claim:

▶️ ₹1.5 lakh under 80C

▶️ ₹2 lakh (or ₹3 lakh for let-out) under Section 24(b) each

This effectively doubles deductions.

 

What common mistakes to avoid while filing?

1. Claiming 80C on pre-construction costs not in the same year.

2. Ignoring higher limit for let-out properties.

3. Filing under the new tax regime—some deductions (like 80C, 24(b)) aren’t allowed for self-occupied homes.

4. Not keeping proper loan and bank documents for verification.

 

How can investments enhance your tax savings?

Explore options that still fit under 80C:

▶️ Invest in PPF, ELSS, ULIPs

▶️ Participate in affordable housing projects that might offer home loan subsidies

Smart planning across tax deductions (Sections 80C, 80D, 80EEA) can maximize savings.

 

FAQ’s

1. How can I save tax on my home loan in India in 2025?

You can save tax on your home loan through Section 80C and Section 24(b). Under Section 80C, you can claim up to ₹1.5 lakh annually on principal repayment, while Section 24(b) allows up to ₹2 lakh deduction on interest. Joint loan holders can double benefits, and first-time buyers can use Section 80EEA for an extra ₹1.5 lakh deduction.

 

2. What is Section 24(b) home loan benefit?

Section 24(b) of the Income Tax Act allows homeowners to claim up to ₹2 lakh annually on home loan interest. This applies to self-occupied properties. For rented or second homes, there is no upper cap, but the total loss from house property that can be set off is restricted to ₹2 lakh per year.

 

3. How much tax can I save on my home loan EMI?

You can save tax on both principal and interest parts of your EMI. Principal repayments qualify under Section 80C (up to ₹1.5 lakh), while interest falls under Section 24(b) (up to ₹2 lakh). Combined, you can save up to ₹3.5 lakh annually, plus additional savings if eligible under Section 80EE or 80EEA.

 

4. What are the tax benefits for first-time homebuyers in 2025?

First-time homebuyers can claim standard deductions under Section 80C and 24(b), plus an additional ₹1.5 lakh deduction under Section 80EEA on interest paid, provided the loan is sanctioned before the notified deadline and property value does not exceed ₹45 lakh. This makes housing more affordable for new buyers.

 

5. Can joint home loans increase tax savings?

Yes, joint home loans allow each co-borrower to claim tax benefits separately, provided they are co-owners and contributing to EMI payments. Each borrower can claim up to ₹1.5 lakh under Section 80C and ₹2 lakh under Section 24(b), effectively doubling the tax benefits to ₹7 lakh annually.

 

6. Are there tax benefits on under-construction property loans?

Yes, interest paid during the construction phase can be claimed as a tax deduction in five equal installments after possession. However, principal repayment benefits under Section 80C are available only after possession, not during construction.

 

7. How do home loan tax benefits compare with HRA exemptions?

Home loan tax benefits apply to property ownership, while HRA exemptions benefit salaried individuals living in rented accommodation. If you own a house but live in another city for work, you may be eligible for both—HRA exemption and home loan tax deductions, maximizing overall tax savings.

 

8. Do NRIs get home loan tax benefits in India?

Yes, NRIs are eligible for the same home loan tax benefits as residents. They can claim deductions under Section 80C and Section 24(b), provided income is taxable in India and the loan is taken from an Indian bank or financial institution.

 

9. What common mistakes reduce home loan tax benefits?

Frequent mistakes include not registering the property, missing joint owner declarations, claiming under-construction interest incorrectly, or selling property before 5 years (which reverses Section 80C benefits). Filing incorrect interest certificates can also reduce eligibility.

 

10. Are home loan tax benefits better than investing in gold?

Yes, from a tax-saving perspective, home loan benefits outweigh gold investments. Real estate offers deductions under Sections 80C, 24(b), and 80EEA, while gold provides no tax relief at purchase. However, gold may provide liquidity and portfolio diversification. Ideally, combine both for stability and long-term wealth.

 

Secure Your Home Investment & Tax Savings

Effective home loan tax planning isn't just about understanding deductions—it’s about integrating them seamlessly into your financial strategy. With updated caps, regimes, and benefits, this fiscal year offers families and investors robust saving opportunities. Looking for a new 4 BHK luxury flat in Pune, or eyeing projects in Pimple Nilakh or Baner? Click below to explore homes that give you lifestyle value and tax advantages in one complete package.