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The Indian government has shown inclination to encourage citizens to invest in a house by providing multiple tax benefits. If you are taking a home loan for purchasing or constructing a house, it must be completed within 5 years from the end of the financial year in which the loan was taken by you. EMIs for housing loans have two components - interest and principal payments. Interest portion of the EMI paid can be claimed as a deduction from your total income up to a maximum of Rs. 2 lakhs.
When it comes to principal repayment, the maximum amount that can be claimed is up to Rs. 1.5 lakhs. To claim this deduction, the property should not be sold within 5 years of your possession, else the deductions that were claimed earlier will be added back to your income in the year of when the property was sold.