Indian Home Loan Tax Benefits: Sections 24(b) and 80C Explained

Published by Abhishek Kumar · June 4, 2026 · 8 min read

A home loan is a significant financial commitment, but it also offers substantial tax saving opportunities under the Indian Income Tax Act. Borrowers can claim deductions on both the interest and principal components of their loan payments, reducing their taxable income. This article explains the rules, limits, and eligibility requirements for claiming home loan tax benefits in India.

Section 24(b): Deduction on Interest Paid

Section 24(b) allows borrowers to claim a tax deduction on the interest portion of their home loan payments. The limits depend on how the property is occupied:

Self-Occupied Property: The maximum deduction is ₹2,00,000 per financial year. If construction is not completed within 5 years from the end of the year the loan was taken, the limit drops to ₹30,000.
Let-Out/Rented Property: There is no upper limit on the interest deduction. However, the net loss from house property that can be set off against other income sources is capped at ₹2,00,000 per year. Any remaining loss can be carried forward for up to 8 years.

Section 80C: Deduction on Principal Repayment

Section 80C allows borrowers to claim a tax deduction on the principal component of their home loan payments, up to a maximum limit of ₹1,50,000 per financial year. This limit is shared with other investments like PPF, EPF, ELSS, and Life Insurance premiums.

To claim this deduction, the borrower must satisfy the following conditions:

The property must not be sold within 5 years of purchase. If the property is sold early, the tax deductions claimed in previous years will be added back to your taxable income in the year of sale.
The deduction is only available for completed properties, not under-construction projects.

Joint Home Loans: Double Your Tax Benefits

If you take out a home loan jointly with a spouse, parent, or sibling, both co-borrowers can claim separate tax deductions. This is a powerful way to maximize tax savings.

To claim joint tax benefits, the following conditions must be met:

Both individuals must be co-borrowers on the loan agreement and co-owners of the property.
Tax deductions are claimed in proportion to each person's share in the loan repayment.

For example, if a husband and wife own a property jointly (50:50 share) and have a joint loan, they can claim up to ₹2,00,000 × 2 = ₹4,00,000 in interest deductions under Section 24(b) and up to ₹1,50,000 × 2 = ₹3,00,000 in principal deductions under Section 80C, doubling their total family tax savings.

Tax Rules for Under-Construction Properties

You cannot claim tax deductions on interest or principal repayments while a property is under construction. However, interest paid during the construction phase (pre-construction interest) is not lost. Once construction is complete, you can claim the total pre-construction interest in 5 equal annual installments starting from the year construction is completed.

For example, if you paid ₹5,00,000 in interest during construction, you can claim a deduction of ₹1,00,000 per year for 5 years, subject to the overall Section 24(b) cap of ₹2,00,000 for self-occupied properties.

To calculate the interest and principal split of your monthly payments, use our interactive Home Loan EMI Calculator.

Frequently Asked Questions

For a self-occupied property, the maximum deduction is ₹2,000,000 per financial year. For a let-out property, there is no upper limit on the interest deduction, but net loss set-off is capped at ₹2,00,000.

Yes, co-borrowers who are also co-owners of the property can claim separate tax benefits up to their share in the loan (up to ₹2,00,000 each for interest and ₹1,50,000 each for principal).

No, deductions under Section 80C and Section 24(b) (for self-occupied properties) are only available under the Old Tax Regime. The New Tax Regime does not allow these deductions.

To understand the basics of loan payments, read our article What is EMI?, or see our guides on home loan prepayments and EMI vs tenure reduction. You can also explore our calculators in the Calculator Hub, or view our team details on our About Us page.