Your dream home could save you lakhs in taxes—here’s how to unlock those savings.
In 2025, buying a house is not just an emotional milestone—it’s also a smart financial move. Thanks to several income tax provisions, homebuyers can significantly reduce their tax liability. If you’re planning to take a home loan, here’s how you can maximize your home loan tax benefits in 2025
Section 80C: Principal Repayment – Claim Up to ₹1.5 Lakhs
Under Section 80C of the Income Tax Act, you can claim up to ₹1.5 lakhs annually on the principal component of your home loan repayment.
Eligibility:
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The property must not be sold within 5 years.
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Only the principal repaid is eligible.
Pro Tip: Combine it with other 80C investments like PPF, ELSS, or LIC for max benefits.
Section 24(b): Interest on Home Loan – Claim Up to ₹2 Lakhs
This section allows you to claim up to ₹2 lakhs per year as a deduction on the interest paid on your housing loan, if the house is self-occupied.
Key Points:
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If the house is rented, there is no limit to the deduction.
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Construction must be completed within 5 years.
Example: If you pay ₹3.5 lakhs interest in a year, you can claim ₹2 lakhs for a self-occupied home. For a rented home, you can claim the full ₹3.5 lakhs
Section 80EEA: Additional ₹1.5 Lakh Deduction for First-Time Buyers
First-time homebuyers can claim an additional deduction of ₹1.5 lakhs on interest payments under Section 80EEA, over and above Section 24(b).
Conditions:
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Stamp duty value of the house must be under ₹45 lakhs.
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The loan must be sanctioned between April 1, 2019 to March 31, 2025.
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You must not own any residential property prior to this purchase.
Total Benefit = ₹2L (Section 24) + ₹1.5L (Section 80EEA) = ₹3.5L deduction on interest
Claiming Tax Benefits for Under-Construction Property
You can still claim tax benefits even if the property is under construction, but only after completion.
You can claim:
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Interest paid during construction in 5 equal installments starting the year of possession.
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Principal only post-possession under Section 80C
Joint Home Loans = Double the Tax Benefits
Buying a home jointly (with spouse, parent, sibling, etc.) and opting for a joint loan allows both co-borrowers to claim separate deductions.
Each co-borrower can claim:
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₹1.5 lakh on principal (Section 80C)
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₹2 lakh on interest (Section 24b)
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₹1.5 lakh additional under Section 80EEA if eligible
Tax Savings Potential: ₹10+ lakhs over the loan period
Quick Summary of Tax Deductions for Homebuyers in 2025
| Section | Type of Deduction | Max Limit (₹) | Key Condition |
|---|---|---|---|
| 80C | Principal Repayment | 1.5 Lakhs | Lock-in for 5 years |
| 24(b) | Interest on Loan | 2 Lakhs (self-use) | Completion within 5 years |
| 80EEA | Additional Interest | 1.5 Lakhs | First-time buyer, property < ₹45 lakhs |
| Joint Loans | Split Benefits | Up to 7 Lakhs total | Co-borrower must be co-owner |
Final Thoughts
If you’re planning to buy a house in 2025, don’t just look at EMI affordability—plan your taxes. A well-timed real estate decision can lead to massive long-term savings, especially if you combine these benefits wisely.
At Upyugo Global, we help working professionals and first-time buyers optimize their tax strategies. Need help filing your returns or planning your deductions?