Tax Benefits Guide: How to Save with Section 80C & 24B

In India, a Home Loan is one of the most powerful tax-saving instruments available to salaried individuals. If planned strategically, you can save a significant amount annually.

Section 80C: Principal Repayment

You can claim a deduction of up to ₹1.5 Lakh per financial year for the principal component of your EMI.

• Inclusions: This limit also covers investments like PPF, LIC, EPF.
• Lock-in: You must hold the property for at least 5 years to retain the benefits. Selling earlier leads to a reversal of the tax breaks.

Section 24(b): Interest Payment

You can claim a deduction of up to ₹2 Lakh per financial year for the interest paid on your home loan.

• Property Type: This applies to Self-Occupied properties.
• Condition: Construction must be completed within 5 years of taking the loan.
• Rented Property: If you rent out the property, there is no upper limit on the interest deduction (though loss set-off against other income is capped at ₹2 Lakh).

Joint Loan Strategy

To maximize benefits, married couples often take a Joint Home Loan.

• This allows both partners to claim separate deductions (₹1.5L + ₹2L each).
• This effectively doubles the total tax shield to ₹7 Lakh per household.

Conclusion

If you fall in the 30% tax bracket, leveraging these deductions significantly reduces the effective interest cost of your mortgage.