Save big on taxes with Sections 80C and 24(b) home loan deductions
Jun 23, 2025
Buying a home is one of the most significant financial decisions you will ever make. Today, we see rising real estate costs all over India, but thankfully, a home loan not only helps turn that dream into reality but also opens up opportunities to save big on income tax.
This financial tool for property ownership provides two powerful tax-saving provisions under the Indian Income Tax Act, Section 80C and Section 24(b), for salaried individuals, self-employed professionals to save Income Tax on ₹1.5 and ₹2 lakh annually through home loan-related deductions.
With the cost of living and real estate prices steadily rising, every opportunity to reduce your tax burden counts. Many taxpayers miss out on these benefits due to poor planning or a lack of awareness. The financial year 2025 is the perfect time to take control of your finances, optimise your loan structure, and maximise your tax savings.
Understanding Sections 80C and 24(b)
Section 80C: Principal repayment
When you pay back a home loan, your EMI is split into principal and interest. You can get a tax deduction of up to ₹1.5 lakh per financial year on the principal part of your home loan repayment under Section 80C.
Furthermore, stamp duty and registration charges can also be claimed under this section, but only if they are under the overall limit of ₹1.5 lakh.
You can only claim this deduction if your home loan is taken for buying or building a residential property, and the catch is that you will need to wait until the construction is complete before the tax benefit kicks in.
Section 24(b): Interest payment
This section helps taxpayers claim a deduction on the interest paid on a home loan. This is beneficial for those with a substantial interest in their EMIs.
For self-occupied properties, you can claim a maximum deduction of ₹2 lakh per financial year on interest payments under other heads of income. If the house is rented out, there is no limit on how much interest you can claim, but only ₹2 lakh can be adjusted against your other income in a year — any extra loss can be carried forward for the next eight years and used later against income from house property.
Leverage joint home loans
One famous financial strategy out there is the joint home loan, which allows spouses or close family members to split the burden of repaying a home loan. This reduces the financial strain and ensures maximum tax savings.
As per ClearTax, around 30% of home loans in urban India are now taken jointly, reflecting growing awareness of the benefits.
Each co-borrower can claim separate deductions under both sections if they are co-owners and contribute to the loan repayment, individually they can claim: That means a couple can together claim up to ₹7 lakh in total deductions per financial year, potentially reducing their tax liability by over ₹2.1 lakh, assuming both fall under the 30% tax bracket.
Impact of New vs Old Tax Regime
For saving taxes when repaying a home loan, choosing the right tax regime can make a big difference. Since the introduction of the new tax regime in FY 2020-21, many taxpayers are confused about which path offers the maximum benefit.
Under the old tax regime, you get the benefit of claiming deductions and exemptions, including Section 80C and Section 24(b).
This regime is ideal for taxpayers with multiple investments, insurance, housing loans, and expenses eligible for a deduction that significantly lowers their taxable income. While the new regime, under Section 115BAC, restricts these benefits.
Key strategies for FY 2025
Conclusion
To summarise, Sections 80C and 24(b) can help you save a big chunk of money on taxes if you plan it right. These deductions can make homeownership much lighter on the wallet.
It’s always a good idea to consult with a tax expert or financial advisor on the above to figure out the best approach for you. A little smart planning today can lead to substantial savings tomorrow.
This financial tool for property ownership provides two powerful tax-saving provisions under the Indian Income Tax Act, Section 80C and Section 24(b), for salaried individuals, self-employed professionals to save Income Tax on ₹1.5 and ₹2 lakh annually through home loan-related deductions.
With the cost of living and real estate prices steadily rising, every opportunity to reduce your tax burden counts. Many taxpayers miss out on these benefits due to poor planning or a lack of awareness. The financial year 2025 is the perfect time to take control of your finances, optimise your loan structure, and maximise your tax savings.
Understanding Sections 80C and 24(b)
Section 80C: Principal repayment
When you pay back a home loan, your EMI is split into principal and interest. You can get a tax deduction of up to ₹1.5 lakh per financial year on the principal part of your home loan repayment under Section 80C.
Furthermore, stamp duty and registration charges can also be claimed under this section, but only if they are under the overall limit of ₹1.5 lakh.
You can only claim this deduction if your home loan is taken for buying or building a residential property, and the catch is that you will need to wait until the construction is complete before the tax benefit kicks in.
Section 24(b): Interest payment
This section helps taxpayers claim a deduction on the interest paid on a home loan. This is beneficial for those with a substantial interest in their EMIs.
For self-occupied properties, you can claim a maximum deduction of ₹2 lakh per financial year on interest payments under other heads of income. If the house is rented out, there is no limit on how much interest you can claim, but only ₹2 lakh can be adjusted against your other income in a year — any extra loss can be carried forward for the next eight years and used later against income from house property.
Leverage joint home loans
One famous financial strategy out there is the joint home loan, which allows spouses or close family members to split the burden of repaying a home loan. This reduces the financial strain and ensures maximum tax savings.
As per ClearTax, around 30% of home loans in urban India are now taken jointly, reflecting growing awareness of the benefits.
Each co-borrower can claim separate deductions under both sections if they are co-owners and contribute to the loan repayment, individually they can claim: That means a couple can together claim up to ₹7 lakh in total deductions per financial year, potentially reducing their tax liability by over ₹2.1 lakh, assuming both fall under the 30% tax bracket.
Impact of New vs Old Tax Regime
For saving taxes when repaying a home loan, choosing the right tax regime can make a big difference. Since the introduction of the new tax regime in FY 2020-21, many taxpayers are confused about which path offers the maximum benefit.
Under the old tax regime, you get the benefit of claiming deductions and exemptions, including Section 80C and Section 24(b).
This regime is ideal for taxpayers with multiple investments, insurance, housing loans, and expenses eligible for a deduction that significantly lowers their taxable income. While the new regime, under Section 115BAC, restricts these benefits.
Key strategies for FY 2025
- Ensure that your EMIs are planned so that the interest and principal components satisfy the maximum deduction limits.
- Choose joint home loans to double tax benefits. According to NoBroker data, around 70% of joint home loan seekers are married couples, and individuals can enhance their loan eligibility by up to 50% with a co-applicant.
Conclusion
To summarise, Sections 80C and 24(b) can help you save a big chunk of money on taxes if you plan it right. These deductions can make homeownership much lighter on the wallet.
It’s always a good idea to consult with a tax expert or financial advisor on the above to figure out the best approach for you. A little smart planning today can lead to substantial savings tomorrow.
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