Buying a home is a big milestone—and a major financial decision. Many Indians rely on mortgage loans to turn this dream into reality. However, what many borrowers don’t know is that mortgage loan tax benefits can significantly reduce their overall tax burden. Whether you’re a salaried individual or a business owner, understanding how these benefits work can help you save money in the long run.
In this blog, we’ll explore the various home loan tax deductions available in India, how to claim them, and why knowing this can give you an edge in managing your finances better.
What Is a Mortgage Loan?
A mortgage loan, also known as a home loan, allows you to borrow money by pledging your property as collateral. You can use it to buy, construct, or renovate a residential property. Beyond providing funds, these loans offer valuable tax advantages under various provisions of the Income Tax Act.
Key Mortgage Loan Tax Benefits in India
Here are the major mortgage loan tax benefits you can claim:
1. Deduction on Interest – Section 24(b)
Under Section 24(b), you can claim a deduction of up to ₹2 lakh per year on the interest paid on your home loan, if the property is self-occupied. If the property is rented, there is no upper limit for this deduction.
➡️ Transition tip: Additionally, this deduction can be claimed from the year in which the construction is completed.
2. Deduction on Principal – Section 80C
You can also claim a deduction of up to ₹1.5 lakh under Section 80C for the principal amount repaid during the financial year.
➡️ Notably, this is part of the overall ₹1.5 lakh limit that includes other eligible investments like PPF, ELSS, and insurance premiums.
3. Additional Deductions for First-Time Buyers – Section 80EE & 80EEA
- Section 80EE: Offers an additional deduction of ₹50,000 on interest for first-time homebuyers, provided the loan amount doesn’t exceed ₹35 lakh and the value of the property is under ₹50 lakh.
- Section 80EEA: Gives a deduction of up to ₹1.5 lakh (over and above Section 24(b)) for loans sanctioned between April 1, 2019, and March 31, 2022.
➡️ In other words, if you qualify under both sections, you can maximise your home loan tax deductions.
Who Can Claim Tax Benefits on Home Loans?
To claim mortgage loan tax benefits, you must:
- Be the owner or co-owner of the property
- Be the borrower of the loan (even co-borrowers can claim deductions individually)
- Possess valid proof of loan repayment (interest certificate, bank statements)
Can You Claim Tax Benefits for Under-Construction Property?
Yes, but with a condition. You cannot claim deductions during the construction period. However, once the construction is completed, you can:
➡️ Claim the pre-construction interest in five equal instalments over the next five financial years, under Section 24(b).
Tips to Maximise Your Mortgage Loan Tax Benefits
Here are a few expert tips:
- Opt for a joint home loan: Both borrowers can claim individual deductions on principal and interest.
- Choose the right lender: Some banks offer annual interest certificates that make tax filing easier.
- Keep documentation ready: Include your loan repayment details while filing ITR to avoid missing out on benefits.
Conclusion
To sum up, understanding the mortgage loan tax benefits in India can help you save a significant amount of money over time. From deductions under Section 24(b) to extra advantages for first-time buyers, the Indian tax system offers multiple opportunities for smart savers.
With the right financial planning, you not only become a homeowner but also gain access to home loan tax deductions that improve your long-term wealth.
