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Tata Capital > Blog > Loan for Home > How to Declare Home Loan in Income Tax: Tax Benefits & Deductions Guide

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How to Declare Home Loan in Income Tax: Tax Benefits & Deductions Guide

How to Declare Home Loan in Income Tax: Tax Benefits & Deductions Guide

A home loan is a bridge that transforms the dream of homeownership into a reality. But while the benefits of a home loan are undeniable, understanding its implications on your income tax can be complicated. From understanding the tax benefits to decoding the various components of your home loan declaration, there are multiple aspects that you must consider.

In this blog, we’ll guide you through the different sections in the Income Tax Act that allow tax deductions on home loans and how to declare home loans in Income Tax Returns.

Section-wise tax benefits on home loan

Before understanding how to declare home loan interest in Income Tax returns, it is crucial to understand the different sections of the IT Act that allow you to claim tax benefits on home loans.

Sections of the Income Tax ActNature of tax benefitsDeduction limit
Section 80CDeduction on repayment of the principal amountUp to ₹ 1.5 lakhs
Section 24bDeduction on the interest provided that the construction or acquisition of the house completed within 5 yearsUp to ₹ 2 lakhs
Section 80EEAdditional deductions for loans taken to build the first property between April 2016 to March 2017, with a maximum loan amount of ₹ 35 lakhs and a maximum property value of ₹ 50 lakhsUp to ₹ 50,000
Section 80EEADeductions for interest payments and section 24bUp to ₹ 1.5 lakhs + ₹ 2 lakhs (under section 24b)

If you have taken a joint home loan, each borrower can claim a deduction of up to ₹ 2 lakhs on the loan interest under section 24b. Moreover, you can claim a deduction of up to ₹ 1.5 lakhs on the principal repayment amount for a joint home loan under section 80C. This section also allows a deduction of ₹ 1.5 lakhs on stamp duty and registration charges.

Step-by-step guide to declare home loan in ITR

Here is a step-by-step guide on how to declare home loans in income tax:

Step 1: Ensure you have all your property ownership documents, certificates of construction and home loan approval with the interests and payments made, municipal taxes receipt and your identity proof.

Step 2: Submit the documents to your employer.

Step 3: Calculate the deductions you can claim on your home loan.

Step 4: Visit the official Income Tax website to complete the submission of your home loan tax.

After following all the mentioned steps, download your tax statement for verification.

Documents required for home loan tax declaration

When making a home loan tax declaration, submitting the correct documents helps ensure smooth and accurate deduction claims. Employers and tax authorities generally require the following:

  • A duly filled home loan declaration form
  • Interest certificate issued by the lender
  • Principal repayment statement
  • Loan sanction letter
  • Possession or completion certificate

Additionally, a valid home loan statement for income tax is essential to verify the breakup of principal and interest. These home loan documents for tax exemption support accurate calculations during ITR filing for home loan and help avoid discrepancies or delays.

Common mistakes to avoid when declaring home loan in ITR

Many taxpayers make avoidable errors during ITR filing for home loan, which may result in reduced deductions, delayed refunds, or tax notices. Common mistakes include:

  • Claiming deductions before possession of the property, as tax benefits are allowed only after possession is completed
  • Submitting incomplete or incorrect home loan documents for tax exemption, such as missing interest certificates or repayment proofs
  • Using an outdated home loan statement for income tax that does not reflect the current financial year
  • Exceeding eligible deduction limits under Section 80C or Section 24(b), which can lead to disallowed claims
  • Mismatch between employer declarations and actual ITR entries, especially for salaried individuals
  • Incorrect claims in joint home loans, such as claiming the full deduction instead of proportionate ownership share

Making an accurate home loan tax declaration and verifying all documents before ITR filing for home loan helps avoid scrutiny and ensures a smoother tax filing experience.

Home loan tax benefits for joint loan applicants

Joint home loan applicants can significantly increase their overall tax savings when deductions are claimed correctly and in line with income tax rules. To ensure smooth ITR filing for home loan, the following points should be considered:

  • Each applicant must be both a co-owner of the property and a co-borrower of the home loan to be eligible for tax deductions
  • Separate home loan declaration forms must be submitted by each borrower, particularly when declaring investments to employers
  • Individual home loan documents for tax exemption, including interest certificates and principal repayment statements, are mandatory for each applicant
  • Tax benefits on principal repayment under Section 80C and interest under Section 24(b) can be claimed based on the ownership and repayment share
  • During ITR filing for home loan, deductions should reflect the actual contribution made by each co-borrower
  • Claiming the full deduction by one applicant, despite shared ownership, may lead to partial disallowance or tax scrutiny
  • Proper documentation helps avoid mismatches between lender records, employer declarations, and income tax returns

A well-prepared home loan tax declaration, supported by accurate documents, ensures that joint applicants can claim their rightful benefits without complications.

Section 80C: Deduction on principal repayment

Section 80C of the Income Tax Act allows taxpayers to claim a deduction of up to ₹1.5 lakh per financial year on the principal repayment of a home loan. This benefit is available only after the possession of the residential property and does not apply to commercial properties.

For a valid home loan tax declaration, taxpayers must submit proof of principal repayment, usually reflected in the home loan statement for income tax issued by the lender. This document helps confirm the exact amount eligible for deduction.

During ITR filing for home loan, it is important to ensure that the principal amount claimed under Section 80C is within the overall limit and does not overlap with other eligible investments such as PPF, ELSS, or life insurance premiums. Proper documentation and accurate reporting help avoid disallowance of deductions and ensure compliance with tax regulations.

Section 24(b): Deduction on home loan interest

Section 24(b) allows taxpayers to claim a deduction on the interest paid on a home loan, up to ₹2 lakh per financial year for a self-occupied residential property. For a let-out property, the entire interest paid may be claimed, subject to applicable income tax limits.

In the case of under-construction properties, the deduction can be claimed only after possession. The interest paid during the construction period is allowed as a deduction in five equal instalments, starting from the year of possession.

For an accurate home loan tax declaration, a lender-issued home loan statement for income tax or interest certificate is mandatory. During ITR filing for home loan, correctly reporting the interest amount ensures maximum eligible benefits while remaining fully compliant with income tax regulations.

In a nutshell

Home loans are a great way to fund your homeownership dreams. By understanding how to declare a home loan for income tax and arming yourself with knowledge, you not only enjoy the comforts of your home but also make the most of the financial advantages it brings.

But there’s another important factor that you must consider – securing a loan from a trusted lender.

At TATA Capital, we provide affordable home loans at the best interest rates in the market. You can also avail of business loans, wedding loans, travel loans, medical loans and more conveniently to streamline your financial needs.

FAQs

3. Can I claim tax benefits on a second home loan?

Yes, you can claim tax benefits on a second home loan.

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FAQs

Do I need to declare my home loan while filing Income Tax Return?

Yes, you must declare your home loan while filing the Income Tax Return. You can follow the step-by-step guide to understand how to declare home loans in income tax.

Under which sections can I claim tax benefits on a home loan?

You can claim tax benefits on a home loan under sections 80C, 24b, 80EE and 80EEA.

Can I claim tax benefits on a second home loan?

Yes, you can claim tax benefits on a second home loan.

How do I declare my home loan interest under Section 24(b) in ITR?

During ITR filing for home loan, declare the interest amount using a lender-issued home loan statement for income tax. Submit the home loan declaration form to your employer or report the details directly in your return for accurate home loan tax declaration.

Can I claim deductions on both principal and interest for my home loan?

Yes. You can claim principal repayment under Section 80C and interest under Section 24(b). Ensure proper home loan tax declaration and submit valid home loan documents for tax exemption during ITR filing for home loan.

What documents do I need to submit for home loan tax deductions?

You typically need a home loan declaration form, interest certificate, principal repayment proof, and a home loan statement for income tax. These home loan documents for tax exemption support correct claims during ITR filing for home loan.

How does a joint home loan affect my tax deductions?

In a joint loan, each co-owner can claim deductions based on ownership share. Separate home loan declaration forms and individual home loan documents for tax exemption are required while ITR filing for home loan.

Can I claim tax benefits on a second home loan?

Yes, tax benefits can be claimed on a second home loan, subject to conditions. Interest deductions depend on property usage and require a valid home loan statement for income tax and accurate home loan tax declaration during ITR filing for home loan.

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