When you are trying to build your dream haven with the help of a home loan, even the littlest of financial help could mean a lot for you. But what if we tell you that you can save on taxes too with your home loans?

The government provides different tax reliefs for home loan applicants to encourage people to build their own homes and help them with their finances while they are on it. But the math associated with it could get complicated, at least for some of us. A home loan tax saving calculator is a tool that can be extremely useful here. Let’s learn more about it and see how it can help you save some tax. 

How does a tax-saving calculator work?

The EMI you pay towards your home loan has two main components.

  1. Interest component
  2. Principal component

The ratio of these components varies throughout your loan repayment tenure. For instance, in the initial years of repayment, more money will go towards interest repayment. As you near the closure of the loan, more amount from your EMI will go for principal repayment. Here, a home loan tax saving calculator will show you the EMI breakdown for the whole period of your home loan repayment. All you need to do is to input the right information about your current loan or the loan you are planning to avail.

But why is this information important? Because tax saving options for interest and principal repayment differ. Let’s see how.

  • Tax saving option for interest repayment

There are two main options to save tax on the money you pay back towards your home loan interest rate. This comes under section 24 of the income tax act and the first option lets you claim for a tax break for up to Rs 2 lakh on the interest payment. But for you to avail this, your home’s construction should be completed.

But sometimes, there will be a gap between the allotment of your home loan and the completion of construction. You will still have to repay your EMIs and the interest you pay back during this time is called pre-construction interest. This amount is also tax deductible, and you can claim the same in five equal instalments. 

  • Tax saving option of principal repayment

The tax saving option for the principal amount repayment comes under section 80c of the income tax act. According to the act, you can claim a tax deduction for up to Rs 1.5 lakh of your income. 


Using the above-mentioned provisions, with additional home loan tax saving options such as on stamp duty, can help you maximise your tax benefits. Using a home loan tax saving calculator could make the whole process easier. So, apply today to start your work on building a dream home.

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