Making Use Of Tax Breaks: A home loan is eligible for a tax deduction under Section 80C of the Income Tax Act of 1961. A home loan comes with multiple tax benefits that significantly reduce your tax outgo. For an under-construction property, the income-tax Act allows you to claim a deduction on interest, also called "pre-construction interest." A deduction in five equal instalments, starting from the year the property is acquired or construction is completed, is allowed. However, the maximum eligibility remains capped at Rs 2 lakh. If your home loan is eligible for a deduction under Section 80EEA, you could claim an additional deduction of Rs 1.5 lakh. The principal portion of the EMI paid for the year is allowed as a deduction under Section 80C. The maximum amount that can be claimed is up to Rs 1.5 lakh. "To promote the housing sector, Budget 2019 has introduced an additional deduction under Section 80EEA for homebuyers for a maximum of up to Rs 1.5 lakh. If the loan is taken jointly, each loan holder can claim a deduction for home loan interest up to Rs 2 lakh and on principal repayment under Section 80C up to Rs 1.5 lakh each in their respective tax returns, "says Archit Gupta, founder and CEO, ClearTax, a tax portal.