A home loan gives up to three deductions — only under the old tax regime: Section 24(b) on interest up to Rs 2,00,000 for a self-occupied house (no cap for a let-out property), Section 80C on principal repayment up to Rs 1,50,000 (shared with your other 80C investments), and Section 80EEA giving an extra Rs 1,50,000 interest deduction to eligible first-time affordable-home buyers. Together, interest of up to Rs 3.5 lakh (24(b) + 80EEA) can be claimed. None of these are available in the default new regime for a self-occupied house.
From AY 2026-27 the Income-tax Act, 2025 renumbers the familiar sections (24 becomes the house-property provisions, 80C becomes Section 123), but the Rs 2 lakh interest cap, the Rs 1.5 lakh principal limit and the conditions are unchanged. Taxpayers, lenders and ITR forms still use the everyday names "24(b)", "80C" and "80EEA".
Home Loan Tax Deductions — Complete Summary
Four provisions can apply to a housing loan. Two are current (24(b), 80C); 80EEA and 80EE are additional interest deductions whose loan-sanction windows have closed but can still be claimed for eligible existing loans.
| Section | Deduction for | Limit | Key condition |
|---|---|---|---|
| Section 24(b) | Interest on home loan | Rs 2,00,000 self-occupied · No cap let-out | Acquisition/construction completed within 5 years of the loan |
| Section 80C | Principal repayment | Rs 1,50,000 (combined 80C) | Property not sold within 5 years of possession |
| Section 80EEA | Interest — first-time buyer | Rs 1,50,000 extra | Stamp value ≤ Rs 45L, no other house, loan sanctioned 1 Apr 2019 – 31 Mar 2022 |
| Section 80EE | Interest — first-time buyer (older) | Rs 50,000 | Loan sanctioned 1 Apr 2016 – 31 Mar 2017; loan ≤ Rs 35L, value ≤ Rs 50L |
All four are old-regime deductions. 80EE and 80EEA cannot both be claimed for the same interest. Stamp duty & registration charges qualify separately under 80C in the year of purchase.
A home-loan EMI has two parts. The interest goes under Section 24(b) (up to Rs 2 lakh, self-occupied); the principal goes under Section 80C (within the Rs 1.5 lakh ceiling, shared with PPF, ELSS, LIC etc.). They are never claimed together under one section.
Home Loan Deductions Work Only in the Old Regime
The new tax regime is the default and offers lower slab rates, but it disallows Section 24(b) for a self-occupied house, Section 80C, 80EE and 80EEA. To claim home-loan deductions you must opt for the old regime when filing.
Old regime — deductions available
- 24(b) interest up to Rs 2L (self-occupied)
- 80C principal up to Rs 1.5L
- 80EEA extra Rs 1.5L (if eligible)
- Standard deduction Rs 50,000 (salaried)
- Best when the loan and deductions are large
New regime (default) — no home-loan relief
- 24(b) blocked for self-occupied house
- 80C, 80EE, 80EEA not available
- Let-out interest allowed, but loss cannot set off vs salary
- Standard deduction Rs 75,000 (salaried)
- Rebate u/s 87A up to Rs 12L taxable income
Interest on a let-out (rented) property can still be set off against that property's rental income even in the new regime — but any resulting loss from house property cannot be set off against salary or other income, and unlike the old regime it cannot be carried forward for such set-off. For a self-occupied house the new regime gives no 24(b) benefit at all.
Not sure whether the old regime's home-loan deductions beat the new regime's lower rates?
Compare regimes →How Much Can a Home Loan Actually Save?
Take a self-occupied house with Rs 2,40,000 annual interest and Rs 1,80,000 principal, for a taxpayer on the old regime. Here is the deduction claimed and the tax saved at the 30% slab (with 4% cess).
Deductions claimed
Tax saved 30% slab
Interest above Rs 2 lakh is capped under 24(b) but the eligible surplus can flow into 80EEA (up to Rs 1.5 lakh) if the first-home conditions are met; principal beyond the Rs 1.5 lakh 80C ceiling gives no extra deduction. Check the exact rate that applies to you on our income-tax slabs page.
Home-loan deductions help most if
- You are on the old regime with a large loan
- Your annual interest is near or above Rs 2 lakh
- You are an eligible first-time affordable-home buyer (80EEA)
- Your combined deductions beat the new-regime rates
Reconsider if
- Your loan is small and other deductions are modest
- The new regime's lower rates + Rs 75k standard deduction win
- The property is let out and the loss cannot be set off
- You have already repaid most of the interest
Under-Construction & Let-Out Property Rules
Pre-construction interest
Interest paid while the property is being built cannot be claimed in those years. Instead, the total pre-construction interest is allowed in five equal instalments starting from the year construction is completed — still within the overall Rs 2 lakh Section 24(b) cap for a self-occupied house. See pre-EMI / pre-construction interest for the calculation.
Let-out (rented) property
- The Rs 2 lakh cap does not apply — full interest is deductible against rental income.
- If interest exceeds rental income, a loss from house property arises.
- Under the old regime, such loss can be set off against other income only up to Rs 2 lakh a year; the balance is carried forward for 8 years against future house-property income.
- Under the new regime, the loss cannot be set off against salary or other heads at all.
The Rs 2 lakh 24(b) cap is per taxpayer, not per property — you can nominate one house as self-occupied and treat the other as let-out. Joint co-owners who are also co-borrowers each claim in proportion to their ownership share. And if you sell within 5 years of possession, the 80C principal (and stamp-duty) deductions already claimed are reversed and added back to income; 24(b) interest is not reversed.
How to Claim Home Loan Tax Benefits in Your ITR
- Lender's home-loan interest certificate
- Principal-repayment figure for the year
- Stamp duty & registration receipts (year of purchase)
- Possession / completion certificate
- Proof of first-home status (for 80EEA/80EE)
- Co-ownership & co-borrower details (joint loan)
- Pre-construction interest working (if applicable)
- Form 12BB submitted to employer
- Old regime selected before filing
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