11 Tax-Saving Strategies Indian Middle Class Overlooks (Practical Steps for 2025)

7. Home Loan Tax Efficiency — Principal, Interest, and HRA Interaction

Home loans give two main tax advantages: principal repayment counts under the familiar Section 80C limit, while interest deductions vary by property use. If the home is self-occupied, your interest deduction may be restricted but principal repayment still helps under the 80C ceiling. If you rent out the property, different rules apply and some interest may be allowed as a deduction against rental income. A common middle-class situation is claiming HRA for the rented place while also repaying a home loan for a house owned in the hometown; both benefits can work together if the facts support them. Keep loan statements, the sale deed, possession documents, and rent receipts together. When buying, insist on a proper loan amortization schedule and retain yearly interest certificates — they make filing easier and prevent missed claims.