“Synopsis”
If you’re an NRI repaying a home loan in India, you may be eligible for significant tax deductions just like resident Indians. But the rules are slightly different, especially under the new tax regime. This guide breaks down the eligibility, limits, and legal framework for home loan tax deductions for NRIs in 2025.
1. Can NRIs Claim Tax Deductions on Home Loans?
Yes. NRIs earning taxable income in India—such as rent or capital gains—can claim deductions on:
- Principal repayment under Section 80C
- Interest paid under Section 24(b)
- Additional deductions under Section 80EE or 80EEA (if eligible)
Legal Reference:
- Income Tax Act, 1961 – Sections 24(b), 80C, 80EE, 80EEA
2. Deduction on Interest Paid – Section 24(b)
Self-Occupied Property
- Deduction up to ₹2 lakh per year
- Loan must be for purchase or construction
- Construction must be completed within 5 years from the end of the financial year in which the loan was taken
Let-Out (Rented) Property
- No upper limit on interest deduction
- Full interest paid can be claimed
- Net loss under “Income from House Property” can be set off up to ₹2 lakh against other income
Note: Pre-construction interest can also be claimed in 5 equal installments starting from the year of completion.
3. Deduction on Principal Repayment – Section 80C
- Deduction up to ₹1.5 lakh per year
- Includes principal repayment, stamp duty, and registration charges
- Property must not be sold within 5 years of possession—else the deduction is reversed
4. Additional Deduction – Section 80EE (Now Closed)
- Allowed only if loan was sanctioned between 1 April 2016 and 31 March 2017
- Deduction up to ₹50,000
- Loan amount ≤ ₹35 lakh and property value ≤ ₹50 lakh
- First-time homebuyer only
5. Additional Deduction – Section 80EEA (Now Closed)
- Allowed only if loan was sanctioned between 1 April 2019 and 31 March 2022
- Deduction up to ₹1.5 lakh
- Stamp duty value ≤ ₹45 lakh
- First-time homebuyer only
Note: You cannot claim both 80EE and 80EEA together.
6. Joint Home Loans: Bigger Benefits
If the home loan is taken jointly:
- Each co-owner can claim up to ₹2 lakh under Section 24(b)
- Each can also claim up to ₹1.5 lakh under Section 80C
- Both must be co-owners and co-borrowers
This is a smart way for spouses or family members to double the tax benefits.
7. What About the New Tax Regime?
Under the new tax regime (Section 115BAC):
- Deductions under Section 24(b) and Section 80C are not available for self-occupied property
- However, if the property is let out, you can still claim interest deduction up to ₹2 lakh
Tip: If you’re earning rental income, you may still benefit from home loan deductions even under the new regime.
8. Eligibility Conditions for NRIs
To claim these deductions:
- You must file an Income Tax Return (ITR) in India
- The loan must be from a recognized financial institution or bank
- Repayment must be made through your NRE/NRO account
- You must be the owner or co-owner of the property
9. Documents Required
- Home loan interest certificate from lender
- Loan sanction letter
- Property ownership documents
- Proof of repayment (bank statements)
- PAN and Aadhaar (if applicable)
Conclusion
In 2025, NRIs can still enjoy substantial tax benefits on home loan repayments—if they plan smartly and stay compliant. Whether you’re buying a home for your family or investing in rental property, deductions under Sections 24(b), 80C, and joint ownership rules can help you save lakhs in taxes.
But remember: these benefits are only available under the old tax regime for self-occupied homes. If you’re under the new regime, you’ll need to rent out the property to claim interest deductions.
So before you choose a tax regime or structure your loan, take a moment to evaluate your income sources, property type, and long-term goals. And when in doubt—consult a tax advisor who understands NRI taxation inside out.
