How to maximize your home loan tax benefits in FY 2024–25: Here's what you can claim

If you have taken a home loan, you are not only building an asset-you are also able to avail several tax-saving options. While submitting your income tax return (ITR) for the financial year 2024–25 and the assessment year 2025–26, make sure that you avail every single benefit that one can derive about home loan repayment. These provisions may reduce your taxable income and provide significant annual savings for you-with the right steps.

Deduction on principal repayment u/s 80C

The maximum portion of your EMI is allowed as a deduction under Section 80C, up to ₹1.5 lakh annually. This is applicable not only to principal repayment on a house loan but also to other eligible investments like PPF, ELSS, and life insurance premiums. Note, however, that the property cannot be sold within five years of taking it—else the gain is made taxable in the year of disposal. Secondly, this relief becomes effective only once per house when the house is fully constructed and possession is taken.

Deduction on interest under Section 24(b)

Interest on your home loan is tax deductible up to ₹2 lakh every year under Section 24(b), in case the property is self-occupied and is constructed within a span of five years. If the house is rented, there is no restriction on interest deduction, but total loss from house property that can be offset against other income is limited to ₹2 lakh per year according to current regulations. The balance can be carried forward for 8 years.

Additional deduction under Section 80

First-time homebuyers can claim one additional deduction of ₹50,000 of interest paid under Section 80EE, over and above the ₹2 lakh under Section 24(b). The loan size must be ₹35 lakh or below and the cost of the property must not exceed ₹50 lakh. Further, the sanction of the loan must have been done between April 1, 2016 and March 31, 2017. This relief is given till the loan is repaid.

Further relief under Section 80EEA (in case you missed 80EE)

If you do not come under Section 80EE but bought your first home after 1 April 2019 and before 31 March 2022, you can claim an additional interest deduction of ₹1.5 lakh under Section 80EEA. The value of the property for stamp duty can be no more than ₹45 lakh, and you have to take the loan when you do not hold another residential property. The benefit does not cover loans taken in FY 2024–25 except when you are still repaying a prior qualifying loan.

Tax relief on stamp duty and registration fees

Besides repayment of principal, you may also take deduction in the event of stamp duty and registration charges under Section 80C—up to the total limit of ₹1.5 lakh. These deductions can be claimed during the year such expenses are incurred and only if the house is not transferred within five years.

Don't miss out while filing your ITR

Home loan tax deductions can cut a whopping amount from your annual tax outgo, especially when you're repaying a massive loan. But make sure the property meets all the eligibility criteria, and that you possess possession or completion certificates. When you're filing your ITR for FY 2024–25, review your home loan statement, confirm your interest and principal breakup, and avail every benefit coming your way under the relevant section.