• Apply now

Money in bank in 24 hours

Apply now

What are the tax savings and other advantages offered by home loans today?

A home loan offers more than just an opportunity to reside in your dream home; it also provides tax rebates and other benefits. While you may be planning on starting mutual funds and FDs, one of the best tax saving investments is buying a home. Alongside various exemptions on the principal you have borrowed and the interest applicable on your loan, certain lenders also give you added advantages that make repayment easier on your pocket.

Here’s a look at how to save tax on your home loan:

Section 80C of the Indian IT Act gives you tax deductions on the principal amount that you borrow as your home loan. Applicable to both first-time homeowners as well as those buying their second home, you can claim deduction up to Rs.1.5 lakh for the latter and Rs.5 lakh for the former under this section. However, keep in mind that these tax savings are only applicable if your home loan is for ready-to-move-in properties and when you retain ownership for at least 5 years since the date of possession.

Section 24 of the Indian IT Act gives you tax deductions on the interest you pay on your home loan. You can claim up to Rs.2 lakh on your home loan interest payment if your home is ready or constructed within 5 years. If the construction crosses 5 years, you can claim Rs.30,000 as deduction. In case you taking a home loan to buy your second home, you can avail this benefit if the property is already constructed or if the construction is complete in 3 years. In case you are buying a home for renting it out, there is no limit on the tax deductions you can enjoy without any limit on the time taken for construction.

Six Things to Remember Before Taking a Home Loan

Section 80EE allows for additional tax benefits to first-time homeowners whose home value if less than Rs.50 lakh and home loan amount is below Rs.35 lakh. You can claim a tax exemption of up to Rs.50,000 on your home loan interest amount in one financial year.

Here’s a look at other ways you can make repaying your home loan more affordable:

- Select a lender who offers you a nominal interest on your home loan such as Bajaj Finserv
- Prepay your home loan without paying any charges to decrease the principal amount and reduce your EMIs
- Choose a lender who offers you a top-up loan to meet your other financial needs with ease
- Choose a Flexi Hybrid Home Loan to reduce your EMIs for the first four years by paying only the interest component
- Choose a lender who gives you a 3-EMI holiday
- Pick a home loan of a long tenor to enjoy lower EMIs

By making the most of tax deductions on your home loan and taking advantage of other ways to ease your repayment, buying a home is one of the most beneficial tax saving schemes. So, plan your finances and begin your journey towards becoming a homeowner today!

The information, products, and services included in or available on bajajfinserv.in may include inaccuracies or typographical errors. Changes are periodically added to the information herein. bajajfinserv.in and/or its respective suppliers / affiliates may make improvements and/or changes on the bajajfinserv.in website at any time.
The material contained in this site and on associated web pages is general information and it is not intended to be advice on any particular matter. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. The decision with respect to any financial product or opportunity or nature or suitability or choice or the viability of any product or service shall always be sole responsibility and decision of the subscriber and user.

How would you rate this article

 Please let us know why?

What did you dislike?

What did you dislike?

What did you like?

What did you like?

What did you like?

Next up


Decoding your home loan fees and charges

Subscribe Now

Subscribe Now

Subscribe to our monthly newsletter and get the latest updates

Thank you for subscribing