Owning a home is a significant milestone, and for many, a home loan is the bridge to achieving this dream. What makes home loans even more attractive is the potential to save on income tax. The Indian Income Tax Act offers several provisions to help taxpayers reduce their tax liability while repaying their home loans. Sections like 80C, 24(b), 80EE, and 80EEA allow borrowers to claim deductions on both principal and interest repayments.
In this article, we will explore how you can maximise your tax savings on home loans in 2025. We will also highlight the benefits of opting for a Bajaj Finserv Home Loan, which offers loan amounts up to Rs. 15 Crore*, flexible repayment tenures of up to 32 years, and tools like the EMI Calculator to plan your finances efficiently.
Home loan deduction limits – Essential details
The table below summarises the maximum tax deductions available on home loans under different sections of the Income Tax Act:
| Section | Focus | Max Deduction Allowed |
|---|---|---|
| 80C | Principal Repayment | Rs. 1.5 lakh |
| 24(b) | Interest Repayment | Rs. 2 lakh |
| 80EE | Additional Interest | Rs. 50,000 |
| 80EEA | First-Time Buyers (Affordable Housing) | Rs. 1.5 lakh (beyond Section 24) |
Deduction on principal repayment under Section 80C
Under Section 80C, taxpayers can claim up to Rs. 1.5 lakh annually for the principal portion of their home loan EMIs. This deduction is available for both self-occupied and let-out properties. Even if your home is under construction, you can claim this benefit, provided the construction is completed within five years from the end of the financial year in which the loan was taken.
Pro-tip: Opting for a long-term Bajaj Finserv Home Loan can help you spread your principal repayment over a longer tenure, enabling you to claim tax benefits consistently.
Deduction for interest paid on housing loan under Section 24
Eligibility and deduction limits
Section 24(b) allows taxpayers to claim a deduction of up to Rs. 2 lakh annually on the interest portion of their home loan EMIs for self-occupied properties. For let-out properties, there is no upper limit on the interest deduction, making it a lucrative option for those investing in rental properties.
Self-occupied vs let-out properties
For self-occupied homes, the Rs. 2 lakh limit applies, while for let-out properties, the entire interest paid can be claimed as a deduction. This makes let-out properties a strategic choice for maximising tax savings.
Example calculation
Suppose you have taken a home loan of Rs. 50 lakh at an interest rate of 8% per annum. Your annual interest payment is Rs. 4 lakh. For a self-occupied property, you can claim Rs. 2 lakh as a deduction under Section 24(b). If the property is let out, you can claim the full Rs. 4 lakh as a deduction.
Pro-tip: Use the Bajaj Finserv EMI Calculator to calculate your monthly EMIs and plan your tax-saving strategy efficiently.
Documentation required
To claim this deduction, you will need:
- A certificate from your lender specifying the principal and interest paid during the financial year.
- Proof of property ownership.
Deduction for joint home loan
If you take a joint home loan, all co-borrowers who are also co-owners of the property can claim tax deductions individually. Under Sections 80C and 24(b), each co-borrower can claim up to Rs. 1.5 lakh on principal repayment and Rs. 2 lakh on interest repayment, effectively doubling the tax-saving potential.
Additional deduction under Section 80EE
Criteria
Section 80EE provides an additional deduction of Rs. 50,000 annually on the interest paid for loans sanctioned during the financial year 2025, provided the loan amount does not exceed Rs. 35 lakh and the property value is within Rs. 50 lakh.
Applicability
This deduction is exclusively for first-time homebuyers.
Things to remember while sending ITR V or acknowledgment form
When filing your Income Tax Return (ITR), ensure the following:
- Verify that your Form 16 includes home loan details.
- Attach the interest certificate provided by Bajaj Finserv or your lender.
- Submit the ITR V form promptly to avoid delays in processing your tax refund.
- Double-check all details before submission to ensure accuracy.
Additional deduction under Section 80EEA
Max deduction
Section 80EEA allows an additional deduction of Rs. 1.5 lakh on interest paid, over and above the Rs. 2 lakh limit under Section 24(b).
Eligibility
This deduction is applicable for affordable housing with a property value of up to Rs. 45 lakh. It is exclusively available to first-time homebuyers.
Pro-tip: Bajaj Finserv’s affordable housing financing options make it easier for you to qualify for this deduction. Check offer now.
Summary of home loan tax benefits
Here is a quick recap of the tax benefits you can claim on your home loan:
| Section | Eligibility Criteria | Max Savings |
|---|---|---|
| 80C | Principal repayment | Rs. 1.5 lakh |
| 24(b) | Interest repayment (self-occupied) | Rs. 2 lakh |
| 80EE | Additional interest deduction for first-time buyers | Rs. 50,000 |
| 80EEA | Affordable housing interest deduction | Rs. 1.5 lakh |
Loss under the head house property
If the interest paid on your home loan exceeds the deduction limits or rental income from the property, you can declare the excess amount as a loss under the head House Property. For self-occupied homes, this loss is capped at Rs. 2 lakh annually.
Conclusion
Tax-saving provisions on home loans can significantly reduce your financial burden, making your EMIs more affordable. By leveraging deductions under Sections 80C, 24(b), 80EE, and 80EEA, you can save lakhs every year.
If you are planning to take a home loan, consider Bajaj Finserv Home Loans, which offer high loan amounts, flexible repayment tenures, and tools like the EMI Calculator to help you plan better. Apply online today and receive approval within 24 hours. Start your journey towards owning your dream home while maximising your tax savings.
