Definition
Home Loan Tax Benefits
Home loan tax benefits are deductions Indian taxpayers can claim on the principal and interest paid on a housing loan, reducing taxable income under the old tax regime.
Broadly, repayment of the loan principal qualifies for deduction under Section 80C (within its overall limit), while the interest paid on a self-occupied home is deductible under Section 24(b) up to a cap. First-time buyers have, at times, had access to additional interest deductions under special sections, subject to conditions and the year of the loan.
These benefits are largely tied to the old tax regime; the new regime forgoes most of them, so borrowers should compare regimes. For a let-out property the treatment of interest differs, and stamp duty and registration charges may also count under Section 80C in the year paid. Keeping the lender's interest certificate is essential at filing.
Related terms
- Section 80CSection 80C allows a deduction from taxable income for specified investments and expenses, such as EPF, PPF, ELSS, life insurance premiums and home-loan principal, under the old regime.
- Joint Home LoanA joint home loan is a housing loan taken by two or more co-borrowers — often spouses or family members — who share the repayment responsibility and can each claim tax benefits.
- Section 24(b)Section 24(b) of the Income Tax Act allows a deduction for the interest paid on a home loan, reducing taxable income under the old tax regime.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.