Home Loan Tax Benefits 2026: Sections 80C, 24(b) and 80EEA Explained

By Gopi, Property Finance Specialist · Published 20 Jul 2026 · Last updated 20 Jul 2026

Tax deduction limits, section references and regime rules quoted here are indicative for 2026 under the Income Tax Act as currently applicable. Verify your specific eligibility and deduction amounts with a qualified chartered accountant or tax advisor before filing your return.

A home loan for an apartment on Sarjapur Road is not only a way to fund a large purchase — it also carries three potential income-tax deductions that can meaningfully reduce your taxable income each year under the old tax regime. Section 24(b) allows you to deduct interest paid on the loan, Section 80C allows deduction of the principal component of your EMI (within the shared overall limit), and Section 80EEA gives eligible first-time buyers an additional interest deduction on top of Section 24(b). Understanding which sections apply to your situation, what the limits are, and how to handle an under-construction property is the difference between a tax return that captures the full benefit of your loan and one that leaves money on the table.

Home Loan Tax Deductions — at a Glance

*Section 80EEA eligibility period and stamp duty threshold: verify current applicability with your CA. All deductions apply under the old tax regime only.

Section 24(b): Deduction on Interest Paid

Section 24(b) of the Income Tax Act is the primary tax benefit of a home loan for most buyers. It allows you to deduct interest paid on the loan from your taxable income each year. For a self-occupied property, the maximum deduction is ₹2 lakh per year. This ₹2 lakh cap applies even if you pay significantly more in interest — in the early years of a large loan, the monthly interest component easily exceeds ₹16,666, which is the monthly rate equivalent of ₹2 lakh per year.

For a let-out property (where the apartment is rented out), there is no upper limit on the interest deduction under Section 24(b). However, if the net loss on the let-out property (interest paid minus rental income received) exceeds ₹2 lakh, only ₹2 lakh of that loss can be set off against your other income (such as salary) in the same year. The remaining loss is carried forward for up to eight assessment years and can be set off against future rental income from that property.

To claim Section 24(b), you need a home loan interest certificate from your lender. Banks typically issue this annually (and sometimes quarterly on request), showing the principal and interest components of all EMIs paid during the financial year. Keep this certificate safely — your CA will use it directly when computing your deduction.

Section 80C: Deduction on Principal Repaid

Section 80C allows deduction of the principal component of your EMI payments from taxable income, subject to an overall cap of ₹1.5 lakh per year across all eligible 80C investments and payments. This cap of ₹1.5 lakh is shared with contributions to PPF, ELSS mutual funds, life insurance premiums, NSC, children’s tuition fees and other 80C items. If you have already exhausted the ₹1.5 lakh limit through other investments, there is no additional room for principal repayment.

The 80C deduction on principal repayment can only be claimed after possession of the property — not during the construction period, even if your EMI has begun. Additionally, a lock-in applies: if you sell the property within five years of possession, all the deductions claimed under Section 80C in prior years are reversed and added back to your taxable income in the year of sale. This is the same five-year holding condition that applies to ELSS, and it is a significant restriction for buyers who may need to sell early.

Stamp duty and registration charges paid to the sub-registrar also qualify for deduction under Section 80C in the year of payment, within the same ₹1.5 lakh overall limit. For a buyer who has not yet exhausted the 80C bucket through other investments, the stamp duty payment (often ₹8–10 lakh on a Sarjapur Road apartment) offers meaningful but limited 80C relief.

Section 80EEA: The First-Time Buyer Addition

Section 80EEA was introduced to provide an additional interest deduction of up to ₹1.5 lakh per year to first-time homebuyers. It was designed to work in combination with Section 24(b), effectively raising the total annual interest deduction for eligible buyers from ₹2 lakh to ₹3.5 lakh. To qualify, several conditions must be met simultaneously: the buyer must not own any other residential property in India on the date of loan sanction; the loan must have been sanctioned by a financial institution within the period specified in the Act; and the stamp duty value of the residential property must not exceed ₹45 lakh.

The stamp duty value limit of ₹45 lakh is a significant constraint for buyers on Sarjapur Road, where most 2 BHK and 3 BHK apartments from established builders are priced well above this threshold. Buyers considering a more modestly priced unit, or those purchasing in a project where the sub-registrar’s guidance value (which determines stamp duty value) is significantly lower than the market price, should verify with their CA whether their specific unit’s stamp duty value falls within the ₹45 lakh limit. Verify the current eligibility period for Section 80EEA with your CA, as the window has been extended and amended over successive budgets.

Joint Home Loans: How Both Borrowers Claim Deductions

A joint home loan, where two individuals (commonly spouses or parent and child) are co-borrowers, can double the household tax benefit if both co-borrowers are also co-owners of the property and both are contributing to loan repayment from their own income. In that case, each co-borrower can independently claim the Section 24(b) deduction (up to ₹2 lakh each on interest) and the Section 80C deduction (up to ₹1.5 lakh each on principal) in their respective income tax returns, in proportion to their share of repayment.

The combined maximum annual deduction across both borrowers is ₹4 lakh on interest (2+2) and ₹3 lakh on principal (1.5+1.5), totalling ₹7 lakh in deductions, all subject to the actual amounts paid. If both co-borrowers also qualify under Section 80EEA as first-time buyers, the combined interest deduction rises to ₹7 lakh (3.5+3.5).

A co-borrower who is not a co-owner cannot claim property-related tax deductions, even if they are repaying part of the loan. Ensure that both people taking the loan are named as co-owners in the sale deed, Builder Buyer Agreement and the loan sanction letter.

Under-Construction Property: Pre-EMI Interest Treatment

When a home loan is disbursed in tranches for an under-construction project, most buyers pay interest only on the disbursed amounts until the loan is fully disbursed and regular EMIs begin. This pre-EMI interest (also called PEMI) can add up to a substantial amount over an 18 to 36-month construction period on a large loan.

Under Section 24(b), the entire pre-EMI interest paid during the construction period is not deductible in the years it is paid. Instead, the cumulative pre-EMI interest is divided into five equal parts and deducted over five successive financial years, beginning from the year in which construction is completed and possession is received. This means buyers of under-construction apartments must defer claiming this portion of their interest deduction. The first year of possession typically yields the largest Section 24(b) claim: one-fifth of pre-EMI interest plus the full-year interest for that financial year, subject to the ₹2 lakh cap.

If the combined pre-EMI instalment and regular interest in the first year of possession exceeds ₹2 lakh, the excess is lost — it cannot be carried forward to future years. This makes it important to time your possession year and loan tenure to maximise the deductible amount within the ₹2 lakh cap.

Old Tax Regime vs New Tax Regime: Which Benefits You More

The new tax regime introduced in Union Budget 2020 and further revised in Budget 2023 offers lower slab rates but does not allow most deductions, including Sections 80C, 24(b) and 80EEA. The old tax regime has higher slab rates but allows the full range of deductions.

For most borrowers with a large home loan, the old regime tends to produce a lower tax liability because the combined deduction from 80C (₹1.5 lakh) and 24(b) (₹2 lakh) — totalling ₹3.5 lakh per year — reduces taxable income significantly. At a marginal tax rate of 30% (plus surcharge and cess), ₹3.5 lakh in deductions saves approximately ₹1.09 lakh in tax per year. Whether this outweighs the benefit of the new regime’s lower rates depends on your total income, other deductions and the specific tax slabs applicable to you.

The break-even point varies by income level and deduction profile. As a rough guide: if your total eligible deductions under the old regime exceed approximately ₹3.75 lakh to ₹4.5 lakh (including 80C, 24(b) and standard deduction on salary), the old regime is typically better for salaried individuals in the ₹10–15 lakh income bracket. Always compute both scenarios with your CA before choosing the regime for a financial year, as the choice is now available on a year-by-year basis for salaried employees.

Practical Example: Deductions on a Rs 1.2 Crore Loan

Illustrative only. Actual EMI, interest split and tax saving depend on interest rate, tenure, income tax slab and applicable surcharge. Compute with your CA before filing.

In this example, the interest paid in Year 1 is far above the ₹2 lakh Section 24(b) cap — the ₹8.45 lakh excess is not deductible under the current rules for a self-occupied property. This is a real limitation of the ₹2 lakh cap for large loans, and it is one reason why renting out the property (which removes the cap on interest deduction) or taking the loan jointly with a co-owner improves the tax efficiency of a large home loan.

What to Tell Your Accountant at Tax Filing Time

• Interest certificate: Obtain your home loan interest certificate from the lender for each financial year. It shows the exact principal and interest split for all EMIs in that year — the exact figures your CA needs for 80C and 24(b) claims.
• Pre-EMI schedule: If you received possession during the year, provide the total pre-EMI interest paid in all prior years so your CA can compute the first one-fifth instalment to claim under Section 24(b).
• Possession date: Possession date determines from which year 80C principal deductions and the pre-EMI five-year amortisation begin. Keep the possession letter and OC copy with your tax records.
• Stamp duty receipt: If you registered the property during the year, provide the stamp duty and registration payment receipts so your CA can assess whether there is remaining 80C room to claim them.
• Co-borrower details: If you have a joint loan, each co-borrower needs the same certificate. Each files their deduction independently in proportion to their EMI contribution. Agree the proportion in writing before filing.
• Regime choice: Confirm with your CA which regime you are filing under. Once chosen for the year, the regime applies to all deductions — you cannot pick and mix.

Frequently Asked Questions

Conclusion

A home loan for a new apartment on Sarjapur Road in 2026 carries three income-tax deductions under the old regime: Section 24(b) on interest (up to ₹2 lakh per year for self-occupied), Section 80C on principal repayment (up to ₹1.5 lakh within the shared 80C limit), and, for eligible first-time buyers, Section 80EEA on additional interest (up to ₹1.5 lakh). The combined annual tax saving at a 30% slab is approximately ₹1.09 lakh from 80C and 24(b) alone. For under-construction apartments, deductions begin from the year of possession, and pre-EMI interest is spread over five years from that point. Joint co-borrowers who are also co-owners can each claim the full limits, doubling the household benefit. The key decisions — old regime versus new, sole buyer versus joint, possession timing — are best made with a qualified CA who can model your specific income and deduction profile. To understand the current pricing and possession timeline at Godrej Verano, visit the price page or speak to the team.