Tax Deductions You Can Claim on Your Home

If you own or rent a place in India, the tax code actually gives you a few ways to keep more money in your pocket. The trick is knowing which deductions you qualify for and how to claim them without getting lost in legal jargon.

First, understand the two main buckets: deductions for owners and deductions for renters. Owners get benefits tied to the purchase price, loan interest, and property taxes. Renters get relief through the House Rent Allowance (HRA) and a newer provision that lets you deduct a portion of rent paid, even if you don’t receive HRA.

Why Tax Deductions Matter

Every rupee saved on tax is a rupee you can put toward a down payment, a home upgrade, or your next vacation. In a market where property prices keep climbing, those deductions can shave off a significant chunk of your annual tax bill. For many first‑time buyers, the interest deduction alone can bring the effective cost of a loan down by 1‑2% per year.

Besides direct savings, deductions also affect how much of your income is considered taxable. Lower taxable income can move you into a lower tax bracket, which means the tax rate applied to all your earnings drops, not just the portion you saved.

Common Deductions for Buyers and Renters

Home loan interest (Section 24(b)): You can deduct up to ₹2 lakh per year on interest paid for a self‑occupied property. The limit doubles to ₹2 lakh × 2 = ₹4 lakh if the house is let out.

Principal repayment (Section 80C): Up to ₹1.5 lakh can be claimed for the principal component of your EMIs, along with other 80C items like life insurance and PPF.

Property tax: For a rented house, the entire municipal property tax is deductible under Section 24(b). For a self‑occupied house, you can claim only the amount that exceeds ₹7,500.

House Rent Allowance (HRA): If you receive HRA from your employer, you can claim the least of three amounts – HRA received, rent paid – 10% of salary, or 40% (non‑metro) / 50% (metro) of salary.

Rent paid without HRA: Under Section 10(13A), even if you don’t get HRA, you can claim a deduction of up to ₹5,000 per month for rent paid on a house you actually live in. This is relevant for freelancers and salaried workers without HRA.

Don’t forget to keep all receipts, loan statements, and tax notices handy. The Income Tax Department may ask for proof, and missing documents can lead to denial of benefits.

One quick tip: if you have a loan for a under‑construction property, you can claim interest only after the construction is complete. However, you can still claim the principal under 80C during the construction phase, which helps smooth out deductions over several years.

Finally, consider filing your returns early. Early filing gives you a larger window to correct any mistakes, and you can avoid the rush‑hour delays that sometimes cause missed deadlines.

By tracking these deductions throughout the year, you’ll turn a complex tax landscape into a simple checklist. It doesn’t take extra money—just a bit of organization—to reduce your tax bill and free up cash for the things that matter most.