Home Loan Tax Benefits Explained
How interest and principal repayments on a home loan reduce tax in the old regime, and what changes in the new regime.
A home loan can reduce your tax in two ways: through the interest you pay and through the principal you repay. Most of these benefits apply only under the old tax regime.
Interest: Section 24(b)
For a self-occupied house, interest paid on the loan is deductible up to ₹2 lakh a year in the old regime. If the property is let out, the interest rules differ, and the loss you can set off against other income is capped. In the new regime, the self-occupied interest deduction is not available.
Principal: Section 80C
The principal part of your EMI counts toward the shared ₹1.5 lakh limit under Section 80C, together with EPF, PPF and others. Stamp duty and registration charges paid in the year of purchase can also be claimed within this limit.
Joint loans
If you and a co-owner are both borrowers and owners, each can claim their own share of interest and principal within their own limits. This can double the benefit for a couple.
Does it change which regime to pick?
Often it does. A large home loan interest deduction can tip the balance toward the old regime. Run your numbers in the income tax calculator and read the old vs new regime guide.
Cutting the interest itself
Prepayment lowers total interest more than the tax deduction ever saves. See the prepayment guide and compute your EMI with the EMI calculator.
Limits and conditions change with each Budget. Confirm current rules with the Income Tax Department or a tax professional.
Frequently asked questions
Can I claim home loan interest in the new tax regime?
Not for a self-occupied house. The Section 24(b) deduction for self-occupied property is available only in the old regime.
Is the principal repayment deductible?
Yes, under Section 80C in the old regime, within the ₹1.5 lakh overall limit.
More guides
Calculators
Last reviewed: October 2026. General education, not financial advice.