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Income Tax Benefit on Home Loan for First-time Homebuyers

09 Jul 2025

Income Tax Benefit on Home Loan for First-time Homebuyers

In the journey of home ownership, a home loan comes in as a great support. It not only provides financial help but also provides tax benefits. In the expensive world, home loan tax benefit not only eases monetary strain but also increases the borrower’s savings. With Wonder Home Finance - Home Loans in Sagwara branch, you can easily avail of home loans in Sagwara. The Income Tax Act considers deduction in home loan repayment, through the reduction in the principal amount and the interest paid on the borrowed amount. Section 80C and section 24(b) of the Income Tax Act define the eligibility criteria for borrowers for home loan tax benefits along with benefits on the interest paid for a year.

Also read: - Top Tips for First-time Home Loan Applicants

Income Tax Benefit on Home Loan under Section 24

Section 24(b) offers a reduction on the interest paid on the home loan within a financial year of up to Rs. 2 lakhs. Individuals who have completed the home construction and have taken the acquisition of the property are eligible to avail of this deduction. Also, provision for a self-occupied house or the one given out on rent is there on tax deduction. If the loan is jointly taken with a co-applicant, then a deduction on the amount of interest paid can be claimed for up to Rs. 2 lakhs by each applicant. The amount of interest paid during the construction period of the property can also benefit from a tax deduction which is divided into five equal installments, which begins around the time in which the construction work is completely done.

Relevant documents need to be submitted to successfully appeal for the tax deduction. The loan agreement, interest certificate, and related papers are part of the documents list that are needed for the tax deductions.

Home Loan Tax benefit under Section 80C

Another income tax benefit on home loan is provided under section 80C on the repayment of the principal amount. A deduction of Rs. 1.5 lakh on the principal amount is provided along with expenses incurred on stamp duty and registration charges. The loan taken must be used to purchase house or construct a new house to avail of this home loan tax benefit. The list of documents needed includes ownership details, completion of construction and date of purchase of property, borrower details, a bank certificate that states principal and interest details, and proof of paid municipal taxes.

Home Loan Tax benefit on Section 80EE

Section 80EE of income tax section allows the borrower to receive tax savings on the interest portion of a home loan of up to Rs. 50,000. The advantage is in addition to the current exemption of Rs. 2 lakhs under Section 24(b). The respective property must be less than Rs. 45 lakhs in value to be eligible for home loan tax benefit under Section 80EE. This applies to loans obtained up until March 31, 2024. To claim home loan tax benefits under this section, the borrower needs to provide a statement from the lender that mentions the amount that is payable and has been paid towards principal and interest. After the reduction based on these, the beneficiary will be taxed according to the tax slab of the going year.

The taxpayer must be a first-time homebuyer to qualify for the deduction under Section 80EE of Income Tax Act. It indicates that as of the day the loan is sanctioned, the person should not be the owner of any residential property. First-time homebuyers are eligible for an additional deduction of up to Rs. 50,000 under Section 80EE on the interest paid on a mortgage during a fiscal year. This deduction is in addition to the one allowed by Section 24(b). The loaned money cannot be used to purchase property worth more than Rs. 50 lakhs. Additionally, the loan sum cannot be greater than Rs. 35 lakhs. The home loan should be approved between particular fiscal years, as advised by the government. One of the most essential documents is one from the lending institution which highlights the interest and the principal amount paid. The taxpayer must also present documentation from the lender detailing the statement of interest paid, the principal amount owed on the mortgage, and the total amount paid thus far.

Home Loan Tax benefit on Section 80EEA

Section 80EEA was introduced to further extend the benefits of Section 80EE. Section 80EEA was designed to give those who purchase affordable housing properties additional tax benefits. Similar to Section 80EE, to be eligible for the deduction under Section 80EEA, the taxpayer must be a first-time homebuyer. Section 80EEA allows first-time homebuyers to deduct an additional Rs. 1.5 lakh from the interest they pay on a house loan each fiscal year. This deduction is in addition to the ones allowed by Sections 24(b) and 80EE. To receive the refund, the borrower must present the interest certificate that was issued by the lending institution.

First-time house purchasers are eligible for an additional deduction of up to Rs. 1.5 lakh on the interest paid on mortgages under Section 80EEA of the Income Tax Act 1961. This deduction is available in addition to any already available deductions. The loan cannot be for more than 45 lakh rupees worth of property. Additionally, the loan sum cannot be greater than Rs. 25 lakhs. The home loan tax benefits are only valid once the building is finished or when you buy a ready-to-move-in property.

Also read: - Multiple Benefits of Loan Against Property

Conclusion

Taking a home loan is an aid in the journey of homeownership. Home loan tax benefits act as an added advantage amidst the favourable home loan options. The Income Tax Act 1961 provides various home loan tax benefits. Every year, take advantage of these tax benefits for mortgages to save a sizable sum. The benefits you claim are reversed and added to your taxable income if you sell the property within five years of taking possession. Such benefits ensure savings which acts as an additional help amidst raging expenses. Contact Wonder Home Finance - Home Loans in Sagwara branch today for more home loan tips.

FAQs for More Insight

Can I claim tax benefits if I have taken a joint home loan with my spouse?

Yes, if you have taken a joint home loan with your spouse, both of you can claim tax benefits individually, provided you are co-owners of the property and contribute to the loan repayment.

Are there any additional tax benefits available for first-time home buyers under affordable housing schemes?

Yes, first-time home buyers purchasing affordable housing properties can avail of additional tax benefits on the interest paid on the home loan under Section 80EEA, subject to certain conditions.

Can I claim home loan tax benefits for a property under construction?

Yes, you can claim tax benefits on the interest paid during the pre-construction period (up to 5 years) for a property under construction, which can be availed in instalments beginning from the year of completion.

What documents do I need to claim tax benefits on my home loan?

To claim tax benefits on your home loan, you will need documents such as the loan statement provided by the home loan lender, the certificate of interest paid, and the completion certificate (for properties under construction).

Disclaimer

The information provided in this article is for general reference purposes only and should not be construed as professional tax advice. Before making any decisions regarding tax planning or home loan-related deductions, it is strongly recommended to refer to the provisions of the Income Tax Act, 1961, including any amendments, rules, or notifications issued by the Income Tax Department, and consult a qualified tax advisor or financial expert.

We explicitly disclaim any liability for any decisions made or actions taken based on the information provided in this article. The provisions of the Income Tax Act, 1961, and its subsequent amendments, shall prevail in case of any discrepancies or conflicts. Users are solely responsible for verifying the accuracy and applicability of the information before relying on it.

Home Loan Tax Benefits

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