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home loan

Home Loan Tax Benefits

  • Multiple Partner Options
  • Competitive Rates Starting From 7.25%* P.a.
  • Flexible Tenures Up To 30 Years

Purchasing a residential property involves significant financial planning, including own contribution savings and recurring home loan EMIs. To encourage homeownership, the Income Tax Act provides provisions allowing deductions on both the principal repayment and interest components of a home loan, helping reduce the overall tax liability of eligible individuals.

Home loans have longer tenure range between minimum 2 years to maximum 30 years. Depending upon the individual applicant`s profile and lender, the APR (Annual Percentage Rate) of a home loan may vary from 7.25% - 13.00% annually.
Illustrative Example: If you take a home loan of Rs. 10 lakh at an annual interest rate of 7.25%* for 30 years would have an estimated EMI of Rs. 6,822. The total repayment would be approximately Rs. 24,55,835, including interest of Rs. 14,55,835. Actual rates, tenure and repayment terms depend on lender approval.

Tax Deductions on Home Loans

On Principal Repayment

  • Self-Occupied Property - Under Section 80C of the Income Tax Act, individuals can claim deductions on actual principal paid up to a maximum limit of ₹1,50,000 per financial year.
  • Rented or Deemed Let-Out Property - Eligible for deductions up to ₹1,50,000 under Section 80C.
  • Second Homes or Under-Construction Properties - Principal repayment tax deductions are generally not applicable during the under-construction phase.

On Interest Payment

  • Self-Occupied Property - Under Section 24 of the Income Tax Act, actual interest paid can be claimed as a deduction up to ₹2,00,000 per financial year, subject to construction completion within the prescribed timeline.
  • Rented or Deemed Let-Out Property - Exemption can be claimed on actual interest paid, subject to applicable set-off limits under the income from house property head.
  • Under-Construction Property - Accumulated pre-construction interest can be claimed in 5 equal installments starting from the financial year in which construction is completed.

Key Tax Savings Considerations

  • Co-borrowers who are also co-owners of the property can individually claim deductions on principal (up to ₹1.5 lakh each) and interest (up to ₹2 lakh each), provided they service the loan from their individual income sources.
  • Stamp duty and registration fees paid during property purchase can also be claimed under Section 80C within the overall ₹1.5 lakh limit.
  • If the residential property is sold within 5 years of possession, previously claimed tax deductions under Section 80C are reversed and added back to the taxpayer's income in the year of sale.