How much will the tax be reduced if I take a home loan?

Taking a home loan can help you reduce tax liability under the old tax regime through deductions on principal repayment and interest payments. Under section 80C, you can claim up to ₹1.5 lakh deduction on principal repayment. This is subject to the condition that the house property should not be sold within 5 years.

The interest paid on the home loan is eligible for deduction under section 24(b) up to ₹2 lakh. This deduction is available if the loan is for the purchase or construction of the house and construction is completed within 5 years. There is no upper limit for interest deduction on let-out properties.

Additionally, you can claim a deduction on interest paid of up to ₹50,000 under section 80EE on loans up to ₹35 lakhs sanctioned during 2016-17. Section 80EEA allows an additional deduction of up to ₹1.5 lakh on interest paid on loans up to Rs 45 lakhs sanctioned during 2019-22.