Home loan tax benefits every first-time buyer should know

A home loan is usually the largest loan a family takes, and the tax deductions attached to it can reduce the effective cost noticeably, but only if the loan is set up with them in mind.

The two main deductions

• Principal repayment counts towards the Section 80C limit of ₹1.5 lakh a year.
• Interest on a self-occupied home is deductible up to ₹2 lakh a year under Section 24(b).

These deductions apply under the old tax regime. If you have opted for the new regime, check which benefits still apply to you before you plan around them.

Joint loans double the room

When two co-owners are also co-borrowers, each can claim the deductions separately on their share, which can double the total benefit for the household.

Put the co-owner on the loan as well as the deed. Owning without borrowing gives you the asset but not the deduction.

Deductions start at possession

Interest paid during construction is claimed in five equal instalments starting from the year you take possession. Keep every interest certificate from the bank from the very first disbursement.