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A home loan consists of both principal and interest payments. The interest portion on the loan can be claimed as a deduction from your income for up to Rs. 2 Lakhs under section 24. The deduction can be claimed from the year in which the construction has been completed. Henceforth, you will not become eligible for a tax deduction on your interest payment during the construction period and pre-construction period of your house.

You can claim up to Rs. 1.5 Lakhs on your principal payment under section 80C of the Income Tax Act. You should not sell your property after construction within 5 years of availing the loan. If you happen to sell it, all the deductions claimed earlier will be added to your income during the year of the sale. You can also claim a deduction for the stamp duty and registration charges for up to Rs. 1.5 Lakhs under the same act. However, you can claim it only during the year in which the expenses incurred.

Joint holders get double benefits. If a husband and wife have jointly taken a home loan, both can get tax benefits of up to Rs. 2 Lakhs each on interest and Rs. 1.5 lakhs each on principal amount in their tax returns.

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