24 Oct 2025 / Subhashish Homes
For most Indians, buying a home in Jaipur is more than a financial decision - it's an emotional milestone. Yet, even as millions celebrate their dream of homeownership every year, a surprising number fail to unlock one of the biggest advantages of taking a home loan - the tax benefits.
Did you know that as per recent data from the Income Tax Department, over ₹85,000 crore worth of deductions were claimed annually under home loan interest across India? Yet, financial experts estimate that nearly 40% of home loan borrowers fail to claim their full eligible benefits - either due to lack of awareness or a misunderstanding of the rules.
That's like leaving a bag of money at your doorstep and walking away.
In this guide, we'll break down not just the popular tax deductions but also the lesser-known ones - so that you can make the most of your home loan and reduce your tax outgo significantly.
When it comes to home loan tax deductions, the Income Tax Act primarily rewards two types of payments - the principal repayment and the interest paid on your home loan. Let's simplify how each works.
Under Section 80C of the Income Tax Act, you can claim a deduction of up to ₹1.5 lakh per financial year on the principal component of your home loan EMI.
This deduction is available only if:
If you sell before that, the deductions you claimed will be reversed in the year of sale.
This section also includes other investments like PPF, ELSS, life insurance premiums, and provident funds — so your total cap under 80C remains ₹1.5 lakh.
This is where the real relief lies. Under Section 24(b), you can claim a deduction of up to ₹2 lakh per annum for the interest component of your home loan — provided the property is self-occupied.
If it's rented out, there's no upper cap; you can claim the entire interest paid (though total loss under house property can't exceed ₹2 lakh as per current tax laws).
Together, Sections 80C and 24(b) can help you save anywhere between ₹60,000 and ₹1 lakh every year — depending on your income slab.
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Many buyers stop at 80C and 24(b), thinking they've squeezed every drop of benefit. But there are more avenues - often overlooked - that can further boost your savings.
If you're buying your first home and the property value is below ₹50 lakh (loan amount under ₹35 lakh), you can claim an additional deduction of ₹50,000 on the home loan interest.
This deduction is over and above the ₹2 lakh limit under Section 24(b).
To promote affordable housing, the government introduced Section 80EEA, allowing an extra deduction of ₹1.5 lakh on interest for homes valued up to ₹45 lakh, provided:
This means that a first-time buyer can effectively enjoy a total interest deduction of ₹3.5 lakh in a financial year - a massive saving.
Buying a home with a spouse or family member? You're in luck. Joint loans don't just ease the repayment burden - they double the tax benefits.
When a property is co-owned and both owners contribute to EMIs, each co-borrower can claim deductions:
This can mean combined savings of up to ₹7 lakh in a year!
Scenario: A Couple Saving ₹80,000 More by Splitting Benefits
Consider Raj and Priya — a couple who jointly own a house worth ₹80 lakh with a home loan of ₹60 lakh. Together, they pay an annual EMI of ₹6 lakh (₹2 lakh principal and ₹4 lakh interest).
If Raj claims all the deductions alone, he saves roughly ₹80,000 in taxes. But by splitting both ownership and EMIs equally, each can claim ₹1 lakh under 80C and ₹2 lakh under 24(b), pushing their combined savings to over ₹1.6 lakh.
A smart partnership indeed — in love and in loans!
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Many buyers assume tax benefits begin the day they start paying EMIs — not quite. If your property is under construction, the rules are slightly different.
Tax deductions for interest payments start only after possession, but there's a special relief called pre-construction interest.
You can claim the total interest paid during the construction period in five equal installments starting from the year the construction is completed.
The maximum deduction allowed for pre-construction interest is ₹2 lakh per financial year (including post-construction interest).
Fact:
As per the current tax framework, the total cap for interest deduction under Section 24(b), including pre-construction interest, remains ₹2 lakh for self-occupied properties.
Tip:
Keep all your interest certificates safely - you'll need them when filing taxes after possession.
Even with tax benefits, a home loan is a long-term financial responsibility. Experts recommend that your EMI should not exceed 35-40% of your monthly income.
Keeping this balance ensures you can still meet lifestyle and emergency expenses without stress.
Having a 6-12 month emergency fund that covers EMIs can protect you against unforeseen financial shocks - like job loss, medical emergencies, or economic slowdowns.
This is not just good financial planning - it's emotional insurance that keeps your dream home from becoming a burden.
A common mistake many homeowners make is juggling multiple loans - home, car, personal - under the assumption that they're managing fine. But this often leads to financial fatigue and delayed goals.
Each loan adds to your credit utilization and affects your eligibility for future loans. Moreover, taking too many loans can also dilute your tax benefits, as you'll hit the maximum deduction limits sooner.
The rule of thumb: Avoid more than two active EMIs at a time. Focus on clearing high-interest loans first before taking on new ones.
Prepayment is one of the most effective ways to reduce your total interest burden and achieve financial freedom earlier. Even small prepayments every year can shave off years from your loan tenure.
For instance, if you prepay just ₹1 lakh annually on a ₹40 lakh, 20-year loan at 8.5%, you could save over ₹6 lakh in interest and close your loan nearly 3 years early.
While prepayment doesn't affect your annual tax deductions drastically, it brings peace of mind — and that's priceless.
Here's a quick checklist to make sure you're squeezing every rupee of benefit out of your home loan:
Remember, tax benefits are not just financial tools — they are smart strategies for building wealth responsibly.
At Shubhashish Homes, we understand that buying a home is one of life's most cherished goals - and also one of its biggest financial decisions. That's why our focus goes beyond construction and amenities; we stand with our customers through every step of their home-buying journey.
Our dedicated Customer Delight Team ensures that every buyer receives personalized guidance - from site visits to understanding payment schedules and even home loan assistance. We've partnered with leading financial institutions to make financing simpler, faster, and more transparent.
Our projects - like Shubhashish Forest, Shubhashish Marina, Shubhashish Geeta, and Shubhashish Prakash - embody thoughtful design, sustainability, and community living. Each space is built with care, where families find not just homes but a better way of life.
Whether it's our 7-tier security, eco-friendly designs, or spacious, sunlight-filled residences, we've crafted each project to deliver comfort, peace, and long-term value.
We believe a home should not just be a possession - it should be a partnership that grows with you. That's why at Shubhashish Homes, we don't just hand over keys - we hand over trust.
Explore our world of thoughtfully designed communities at www.shubhashish.com, and see how we're helping thousands of families unlock not only the joy of homeownership but also the financial wisdom that sustains it.
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