Deduction under Section 80C: You can claim tax deduction of up to Rs 1.5 lakh under this section on repayment of the principal component of the home loan. Banks and financial institutions provide such bifurcation between the principal and interest components of the EMIs paid by you.
This deduction is available for purchase or construction of new house and you cannot sell the house within five years of possession of the property if you avail this deduction. If the home loan is taken jointly with your family member, both of you can avail deduction on principal repayment of the home loan. Also, under this section, you can also claim deduction on stamp duty and registration charges and other expenses related to the transfer of property in your name.
Deduction under Section 24: Tax deduction up to Rs 2 lakh can be claimed by you under this section on the interest component of your home loan repayment. This deduction can be availed if you and your family reside in the property or even if you keep the property vacant.
However, if you rent out your house, you are eligible to claim deduction on the entire interest on the home loan. If you have taken a home loan jointly with a family member, both of you can avail deduction on interest up to Rs 2 lakh each.
Deduction under Section 80EE: First-time home buyers can claim deduction under this section, provided the home loan does not exceed Rs 25 lakh and the property value does not exceed Rs 40 lakh. Also, the first-time home owners need not occupy the property themselves to avail this deduction.