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🏡 Home Buyer’s Guide to Home Loan Tax Benefits FY25-26

Buying a dream home is a big milestone for every Telugu family. Along with happiness, one common question every buyer asks is – “EMI kattina taruvatha income tax lo ela save avuthundi?” To answer this, let’s explore the Home Loan Tax Benefits for Financial Year 2025 26 (FY25-26, Assessment Year 2026-27) simply and practically.

This guide is especially made for Telugu home buyers who may not be comfortable with complicated tax section numbers. We will explain everything in easy words with real-life examples.

✅ Why Tax Benefits on Home Loans are Important

• Most home buyers in Hyderabad, Warangal, Vijayawada, and other cities take housing loans.
• EMIs are usually long-term commitments (15–20 years).
• Knowing the right tax-saving options can help you save lakhs of rupees every year.
• Depending on the tax regime (old or new), benefits change.

So, understanding these rules will help you make smart decisions.

🏠 Home Loan EMI – Two Parts

Every EMI has two components:

1. Principal Amount – The actual loan amount you borrowed.
2. Interest Amount – Extra money you pay to the bank for borrowing.

Both parts can give you tax benefits under certain conditions. Let’s see how.

📌 Principal Repayment Tax Benefit

• Under the old tax regime, you can claim up to ₹1.5 lakh per year for the principal portion of your EMI.
• This falls under Section 80C (but don’t worry about the section name, just remember ₹1.5 lakh limit).
• Stamp duty and registration charges are also eligible in the year of purchase.

⚠️ Important Rule: If you sell the property within 5 years, this benefit will be reversed.

👉 Example: Suppose you bought a 2BHK flat in Bachupally and your annual principal repayment is ₹1,20,000. You can claim the entire amount as a deduction from your income.

📌 Interest Repayment Tax Benefit

• For a self-occupied house (where you live), you can claim up to ₹2 lakh per year for the interest portion of your EMI.
• For a rented house, there is no upper limit – you can claim the entire interest amount.

👉 Example: If your EMI interest comes to ₹2.4 lakh in a year and your house is rented out in Uppal, you can claim the full ₹2.4 lakh as a deduction.

📌 First-Time Home Buyer Extra Deduction

If you are buying your first house, you get an extra benefit:

• ₹50,000 additional deduction per year.
• Conditions:
  • Loan amount ≤ ₹35 lakh
  • Property value ≤ ₹50 lakh
  • You should not own another house at the time of loan sanction.

👉 Example: A young IT employee buying their first home in Gachibowli for ₹45 lakh with a ₹30 lakh loan can enjoy this extra ₹50,000 tax saving.

📌 Old Regime vs New Regime

This is the most important decision for FY25-26.

• Old Tax Regime
  • You can claim all benefits:
    • ₹1.5 lakh (Principal)
    • ₹2 lakh (Interest)
    • ₹50,000 (First-time buyer)
  • Maximum total deduction possible = ₹4 lakh (if eligible).
• New Tax Regime
  • No benefits for home loan EMI principal or interest.
  • Only standard deduction rules apply.
  • If you choose this regime, consider prepaying your home loan early to reduce interest.

👉 Simple Tip:

• Want to save on tax? → Go for old regime.
• Want to save on loan interest? → Choose prepayment strategy under new regime.

📌 Pre-Construction Interest Benefit

• If your house is still under construction, the interest you pay during that period can also be claimed.
• It is allowed in 5 equal installments after the construction is completed and possession is taken.

📌 Quick Comparison Table

🔑 Tips for Telugu Home Buyers

1. Plan before filing ITR – Decide whether old or new regime is better for you.
2. Keep documents safe – Loan statement, possession certificate, and registration papers are needed.
3. Don’t sell within 5 years – Otherwise, principal benefit will be cancelled.
4. Check first-time buyer eligibility – Many young couples in Hyderabad and Vijayawada miss claiming this ₹50,000 benefit.
5. Consult a CA – For higher loan amounts or rented property, get professional advice.

📝 Final Word

For Telugu home buyers in FY25-26, home loan tax benefits can save you a big amount if you choose the old tax regime. You can claim deductions on principal repayment, interest repayment, and even get extra benefits as a first-time buyer.

But if you choose the new regime, these benefits are not available. In that case, focus on prepayment to reduce your EMI burden faster.

🏡 Smart Strategy:

• If you want maximum tax savings, go with the old regime.
• If you prefer simple tax slabs and don’t mind losing deductions, choose the new regime and plan for loan prepayment.

Either way, understanding these rules will help you become a smart and confident home buyer.