Top tax benefits you can claim on home loan repayment

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For many Indians, a home loan is the biggest liability they’ll ever take on. The good news is that the taxman gives you some relief on those heavy EMIs—but only if you’re sticking with the old tax regime. Under the new regime, most deductions vanish, making this decision even more crucial. Let’s break down what you can actually claim in FY 2025-26.

Interest on home loan – Section 24(b)

If you’ve taken a home loan for a self-occupied house, you can deduct up to Rs 2 lakh a year on the interest portion of your EMI. For a let-out property, there’s no upper cap on interest, though the loss you can set off against other income is limited to Rs 2 lakh. This benefit continues in the old regime; the new regime does not allow it.

Principal repayment – Section 80C

The principal portion of your EMI qualifies for deduction under Section 80C, up to the overall Rs 1.5 lakh limit. Remember, this is the same section that covers investments like PPF and ELSS, so your total cap remains unchanged. Again, this benefit is only for old regime taxpayers.

Extra deductions for first-time buyers

Two special provisions exist, though both have specific conditions:

· Section 80EE: An additional deduction of up to Rs 50,000 on home loan interest. This applies only if the loan was sanctioned between April 2016 and March 2017 for properties under Rs 50 lakh.

· Section 80EEA: An extra Rs 1.5 lakh deduction for affordable housing loans sanctioned between April 2019 and March 2022. If you didn’t take your loan in that window, you can’t claim this now.

You cannot claim both 80EE and 80EEA for the same loan.

HRA vs home loan benefits

If you live in a rented house while repaying a home loan elsewhere, you may be eligible for House Rent Allowance (HRA) benefits on the rent you pay, and Section 24/80C deductions on your loan. But this depends on your actual situation and salary structure.

Old vs new regime choice

This is where most taxpayers get tripped up. If you’ve opted for the new regime under Section 115BAC, you cannot claim deductions under Sections 24(b), 80C, 80EE, or 80EEA. The new regime offers lower slab rates, but you lose these benefits. For home loan takers, the old regime often makes more sense, especially if your loan is large.

Final word

Home loans are long commitments, and the tax reliefs can save lakhs over time. But with the new tax regime now the default, you’ll need to weigh whether sticking to the old structure gives you more net benefit. For many borrowers with big EMIs, the old regime still wins.