If you have bought a house or are planning to buy one, then this post is gold for you! The government offers such a huge tax benefit on home loans that you can save lakhs of rupees in 10-15 years. There are two main sections – 80C and 24 – if you understand these, even the taxman will join hands with you!
1. Section 80C – Principal Benefit (Up to ₹1.5 lakh per year)
The amount you use to repay the principal amount of the loan each year is directly tax-exempt.
Limit: ₹1.5 lakh per year (you and your spouse can claim separately)
This includes the home loan principal, as well as PPF, ELSS, insurance, and FD.
Example:
You are paying ₹1.2 lakh as principal. → You put the remaining ₹30,000 into PPF, leaving ₹1.2 lakh in the balance. → You earn a full ₹1.5 lakh benefit.
If the loan is in the name of both husband and wife, they can claim up to ₹1.5 lakh = ₹3 lakh!
2. Section 24 – The Biggest Thing on Interest!
This is the real game! You get a separate deduction for the interest you pay on the loan.
A. If you live in the house yourself (self-occupied):
→ Maximum ₹2 lakh per year interest deduction
→ Up to ₹4 lakh if both husband and wife claim!
B. If the house is rented out or is vacant (let-out / deemed let-out):
→ Full interest deduction – no limit!
→ Full deduction even if the interest is 5 lakh, 7 lakh, or 10 lakh!
Real example:
You are paying 7 lakh interest and have rented the house → Full 7 lakh deduction. If your total salary is 15 lakh, the tax can be almost zero!
How much tax can be saved? (Individual in 30% Tax Bracket)
| Situation | Total Less | Tax Savings (30% + Cess) |
|---|---|---|
| Resident (Single) | ₹3.5 lakh | ₹1.05 lakh + per year |
| Resident (Joint Loan) | ₹7 lakh | ₹2.1 lakh + per year |
| House rented (7 lakh interest) | ₹8.5 lakh + | ₹2.5 lakh + per year |
You can save up to 30-40 lakh in tax in 20 years!
Extra Bonus Tips People Don’t Share
Joint Loan?
Loan in both names → Both can claim 80C and 24 separately → ₹7 lakh exempt!
Is the house still under construction?
Interest can be claimed by dividing it over 5 years when possession is obtained.
Have a second house?
First house self-occupied → ₹2 lakh limit.
Second house will be considered a “deemed let-out” → minus the entire interest!
Made a prepayment?
Any extra principal payment also counts under 80C (in the same financial year).
Stamp duty and registration charges
These can also be claimed under 80C (only in the year in which it is paid).
Understand at a Glance
| Category | Single Person | Joint Loan (Husband + Wife) |
|---|---|---|
| Principal (80C) | ₹1.5 lakh | ₹3 lakh |
| Interest (own) | ₹2 lakh | ₹4 lakh |
| Interest (rented) | No limit | No limit |
| Total maximum exemption (self-occupied) | ₹3.5 lakh | ₹7 lakh |
| Total tax savings (30% bracket) | ₹1.05 lakh+ | ₹2.1 lakh+ per year |
Conclusion
If you’re renting out your property and earning interest of ₹7-8 lakh per year, your tax can be almost zero! Most people only claim up to ₹2 lakh. Because they do not know that if it is given on rent then the entire interest is minus.
So now you understand what is the real benefit of buying a house? Tell me in the comments – how much is your loan, how much interest is being paid, and how much tax is being saved every year? If you are planning this then calculate it right now – open the EMI calculator and see how much tax is going to be saved!
