For most people, buying a home with their own savings has become increasingly difficult. Rising inflation and the high cost of living have pushed homeownership out of reach for many. This is why EMIs continue to be the most practical route to owning a house. A manageable down payment at the start and the balance spread across monthly instalments make the dream of a home far more achievable. Add the income tax benefits available on home loan repayment, and the financial burden becomes lighter. It’s no surprise that these tax deductions often feel like a welcome bonus for first-time buyers.
Real estate is also making a strong comeback. Demand has surged, prices remain within a reasonable range, and borrowing rates are still attractive for many. This has created a favourable moment for both end-users and investors to re-enter the market. Income tax incentives on home loans further sweeten the deal, though some key benefits are set to change.
One of the major updates relates to Section 80EEA. The central government has ended this additional benefit for first-time homebuyers from April 1, 2022. When it was introduced in Budget 2019, Section 80EEA offered an extra deduction of Rs 1.5 lakh on home loan interest for those purchasing their first property valued up to Rs 45 lakh. This was on top of the deduction available under Section 80EE. Now, this advantage is only available if the borrower received their loan sanction letter by March 31, 2022, even if the disbursement happened in the following financial year. For those who met this deadline, the benefit continues for the full loan tenure.
Apart from Section 80EEA, homebuyers continue to enjoy significant tax savings under two key sections: Section 80C for principal repayment and Section 24 for interest paid. Together, they form the backbone of tax relief on housing loans.
Under Section 80C, the principal portion of the EMI qualifies for tax deduction up to Rs 1.5 lakh per year. This limit includes other investments such as PF, life insurance premiums and ELSS mutual funds. For many salaried taxpayers, this makes housing loan repayment one of the most valuable components of their annual tax planning.
Section 24 deals with deductions on interest repayment. If the property is self-occupied, the maximum deduction allowed is Rs 2 lakh a year. Homebuyers who fall within the affordable housing segment enjoyed the additional Rs 1.5 lakh deduction under Section 80EEA, but that window has now closed unless they met the earlier sanction deadline. Still, the Rs 2 lakh deduction under Section 24 remains a major incentive for buying and owning a home.
Another important relief is available in the case of under-construction properties. Many buyers start paying interest long before they receive possession. Tax laws allow them to claim the total interest paid during this period, known as pre-construction interest, in five equal instalments after the property is completed or possession is taken. This spreads the tax benefit over several years and helps recover part of the financial strain from the construction period. However, this benefit applies only if the construction is completed within five years from the end of the financial year in which the loan was taken. If it isn’t, the allowable deduction drops sharply to Rs 30,000 a year.
Joint ownership is another way to expand tax benefits. When a property is purchased jointly, each co-owner who is also a co-borrower can claim deductions individually. This means a couple can each claim up to Rs 2 lakh on interest payments for a self-occupied home. In cases where a working adult child is added as the third co-owner and co-borrower, all three individuals can separately claim their eligible interest deductions. This makes joint ownership an effective way to maximise tax savings and lighten the EMI burden.
Tax rules also allow relief on two self-occupied houses without levying notional rent, which was not the case earlier. But if a taxpayer owns more than two such houses, the third property will attract tax calculated on its expected rent, even if it is not actually rented out.
Broadly, the tax benefits available include interest deduction under Section 24(b), principal deduction under Section 80C, and additional eligible benefits under Section 80EEA for those who qualified before the deadline. Pre-construction interest is also deductible, but only after the property is completed and within prescribed limits.
First-time buyers also had access to Section 80EE, which offers up to Rs 50,000 in deduction, provided specific conditions are met. These include a loan amount not exceeding Rs 35 lakh, property value capped at Rs 50 lakh, and sanction dates between April 1, 2016 and March 31, 2017. The buyer must also not own any other house on the date the loan is approved. This benefit is available to both resident and non-resident individuals but not to companies, trusts or HUFs. Though the provision applies to an older window, it still helps those who meet the criteria.
In today’s market, EMIs combined with tax relief make homeownership far more manageable. While some incentives such as 80EEA have been withdrawn, the existing structure of deductions continues to offer meaningful savings. With real estate gaining momentum and borrowing conditions still largely favourable, many prospective homebuyers see this as a promising time to take the plunge. The combination of stable prices, expanding projects and ongoing tax benefits ensures that owning a home remains within reach for those planning carefully and acting at the right moment.
