Loans
A home loan is often the largest liability a person takes on in their lifetime, but the Indian government offers substantial tax deductions to ease the burden. A home loan EMI has two parts — Principal and Interest — and the Income Tax Act provides separate deductions for each.
The principal portion of your EMI qualifies for deduction up to ₹1.5 Lakhs per financial year. To claim this, construction must be complete, and you cannot sell the property within 5 years of possession, or the claimed deductions are reversed and taxed. Stamp Duty and Registration charges can also be claimed under 80C in the year they're paid.
This is where the bigger savings lie. Under Section 24(b), you can claim up to ₹2 Lakhs per year on interest paid for a self-occupied property. For a let-out property, you can deduct the entire interest paid without an upper limit, though the loss set-off against other income is capped at ₹2 Lakhs.
If you buy the property jointly with your working spouse and take a joint home loan, both co-borrowers can claim these benefits individually in proportion to their share — together, up to ₹3 Lakhs under 80C and ₹4 Lakhs under 24(b) every year.
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