Buying a home is one of the biggest financial decisions in India, and the government provides multiple tax benefits on home loans to reduce the burden on taxpayers. Under the Income Tax Act 1961, homeowners can claim deductions on both principal repayment (Section 80C) and interest payment (Section 24(b)). In 2025, these rules continue to offer significant savings for salaried individuals, self-employed professionals, and first-time homebuyers.

1. Home Loan Tax Benefits under Section 80C

Under Section 80C, you can claim a deduction on the principal repayment of your home loan. The maximum limit under Section 80C is ₹1.5 lakh per financial year.

Key Conditions:

• The property must not be sold within 5 years of possession; otherwise, deductions claimed earlier will be reversed.
• Deduction is available for both self-occupied and let-out properties.
• Other investments like ELSS, PPF, and LIC premiums also share the same ₹1.5 lakh limit.

2. Home Loan Tax Benefits under Section 24(b)

Section 24(b) provides deduction on the interest paid on home loan.

Deduction Limits (FY 2024-25):

Key Points:

• The loan must be taken for purchase, construction, or renovation of a house.
• Construction must be completed within 5 years from the end of the financial year in which the loan was taken.
• Pre-construction interest can also be claimed in 5 equal installments starting from the year of possession.

3. Additional Benefits for First-Time Homebuyers

Earlier, Section 80EE and Section 80EEA provided additional benefits for first-time homebuyers. However, as of 2025, these provisions are not extended. Taxpayers should check for government updates in each financial year.

4. Combined Tax Benefits Example

Let’s assume you are paying:

• Principal Repayment: ₹1,20,000
• Interest Payment: ₹2,50,000

5. How to Claim Home Loan Tax Benefits

1. Collect your Home Loan Interest Certificate from the lender.
2. Submit it to your employer (for salaried individuals) to adjust TDS or claim refund while filing ITR.
3. Enter the details in the House Property Section of your ITR form.
4. Ensure you claim deductions under both Section 80C and Section 24(b) separately.

Conclusion

By claiming home loan tax benefits under Section 24(b) and 80C in 2025, taxpayers can save up to ₹3.5 lakh annually, depending on their repayment structure. For first-time buyers and salaried individuals, these deductions significantly reduce the overall tax burden while encouraging home ownership.