Home Loan Tax Benefits in India: Section 24, 80C, 80EE and 80EEA for FY 2026-27

A self-occupied homeowner on the old regime can claim up to Rs 5,00,000 per year in home loan deductions: Rs 2,00,000 interest under Section 24(b), Rs 1,50,000 principal under Section 80C, Rs 50,000 under Section 80EE and Rs 1,50,000 under Section 80EEA, provided the loan was sanctioned in the eligible window for the last two sections.

A home loan is the largest financial commitment most Indian households carry. The Income Tax Act offers four separate deduction sections to reduce the tax burden on borrowers. Used together, they can lower taxable income by several lakh rupees every year. But each section has its own cap, its own conditions, and its own regime eligibility. Getting one wrong can mean leaving money on the table or triggering a mismatch during AIS reconciliation.

This guide covers every deduction available on a home loan for FY 2026-27, with section references, limits, conditions, examples, and the old-vs-new regime treatment.

Section 24(b): Interest Deduction on Home Loan

Section 24(b) of the Income Tax Act allows a deduction for interest payable on capital borrowed for acquiring, constructing, repairing or reconstructing a residential property. The deduction is claimed under the head "Income from House Property" in your ITR.

Self-Occupied Property

For a property you occupy yourself (or leave vacant for personal use), the maximum deduction is Rs 2,00,000 per year. Two conditions apply:

• The loan was taken on or after 1 April 1999 for acquisition or construction.
• Construction or acquisition is completed within 5 years from the end of the financial year in which the loan was taken.

If the 5-year condition is not met, the cap drops from Rs 2,00,000 to Rs 30,000 per year. This is a common trap for delayed-possession projects.

Let-Out or Deemed Let-Out Property

For a property that is rented out (or treated as deemed let-out because you own more than two house properties), the entire interest paid is deductible with no upper limit. However, the resulting loss from house property can be set off against other income heads only up to Rs 2,00,000 per year. Any excess loss is carried forward for up to 8 assessment years, to be set off only against future house property income.

Example: Self-Occupied Property

Priya has a self-occupied flat in Hyderabad with annual home loan interest of Rs 2,60,000. Construction was completed in 2024, within the 5-year window.

Under Section 24(b), Priya claims Rs 2,00,000. The remaining Rs 60,000 is not deductible and cannot be carried forward for a self-occupied property.

Example: Let-Out Property

Rahul owns a let-out apartment generating annual rent of Rs 3,60,000. His annual home loan interest is Rs 4,80,000. After the 30% standard deduction under Section 24(a), his Net Annual Value is Rs 2,52,000. Deducting the full Rs 4,80,000 interest gives a loss from house property of Rs 2,28,000.

Rahul can set off Rs 2,00,000 of this loss against his salary income in the current year. The remaining Rs 28,000 is carried forward.

Section 80C: Principal Repayment Deduction

Section 80C allows a deduction for the principal portion of home loan EMIs, up to Rs 1,50,000 per financial year. This limit is shared with other 80C-eligible investments such as PPF, ELSS, EPF and life insurance premiums.

Key points for home loans under Section 80C:

• Only the principal component of the EMI qualifies. The interest component is covered by Section 24(b).
• Stamp duty and registration charges paid on the property purchase are also eligible under Section 80C, but only in the financial year of purchase.
• Available only under the old tax regime. The new regime does not allow Section 80C.
• If you sell the property within 5 years of possession, the Section 80C deduction claimed on principal repayment in all prior years is reversed and added back to your income in the year of sale.

Section 80C Under the Income Tax Act 2025

From Tax Year 2026-27 (the first year governed by the Income Tax Act 2025), Section 80C maps to Section 123 read with Schedule XV. The deduction limits and eligible instruments remain the same. If you are filing for FY 2025-26 (AY 2026-27), the old Section 80C reference applies. For FY 2026-27 (TY 2026-27) onwards, use the new section numbers.

Section 80EE: Additional Rs 50,000 Interest Deduction

Section 80EE provides an additional deduction of up to Rs 50,000 per year on home loan interest, over and above the Rs 2,00,000 limit of Section 24(b). This section is for first-time homebuyers only.

Eligibility conditions (all must be met):

• The home loan was sanctioned between 1 April 2016 and 31 March 2017.
• The sanctioned loan amount does not exceed Rs 35 lakh.
• The value of the residential property does not exceed Rs 50 lakh.
• The borrower does not own any other residential property on the date of loan sanction.

Section 80EE has expired for new loans. However, if your loan was sanctioned during the April 2016 to March 2017 window and you continue to pay interest, you can continue claiming this deduction every year until the loan is fully repaid.

Available only under the old tax regime.

Section 80EEA: Additional Rs 1,50,000 Interest Deduction

Section 80EEA extends additional interest relief for first-time buyers of affordable housing, allowing up to Rs 1,50,000 per year beyond the Section 24(b) limit.

Eligibility conditions (all must be met):

• The home loan was sanctioned between 1 April 2019 and 31 March 2022.
• The stamp duty value of the property does not exceed Rs 45 lakh.
• The borrower does not own any other residential property on the date of loan sanction.
• The borrower is not eligible for deduction under Section 80EE (they are mutually exclusive for loans sanctioned after 2017).

Like Section 80EE, this section has expired for new loans. Borrowers whose loans were sanctioned in the eligible window continue to claim the deduction each year.

Available only under the old tax regime.

Pre-Construction Interest: The 5-Instalment Rule

If you are paying EMIs while your property is under construction, the interest paid during the pre-construction period (from the date of borrowing to the end of the financial year preceding the year of completion) is not deductible immediately. Instead, it is aggregated and allowed in five equal annual instalments starting from the financial year in which the property is completed or acquired.

How It Works

1. Add up all interest paid from the loan disbursement date to 31 March of the year before completion.
2. Divide the total by 5.
3. Claim one-fifth each year for 5 years, starting from the year of completion.
4. This instalment is added to the current year's interest and the combined total is subject to the Rs 2,00,000 cap for self-occupied property.

Example

Meera took a home loan in October 2022. Her flat was completed in September 2025. Total interest paid during the pre-construction period (October 2022 to March 2025) is Rs 6,50,000.

One-fifth: Rs 1,30,000 per year for 5 years (FY 2025-26 through FY 2029-30).

In FY 2025-26, Meera also pays regular interest of Rs 90,000. Her total Section 24(b) claim for the year: Rs 90,000 + Rs 1,30,000 = Rs 2,20,000, capped at Rs 2,00,000 (self-occupied).

Joint Home Loan: Double the Benefit

When two or more people take a home loan jointly and all co-borrowers are also co-owners of the property, each person can claim deductions independently:

• Section 24(b): Up to Rs 2,00,000 each for self-occupied property (in proportion to ownership and EMI share).
• Section 80C: Up to Rs 1,50,000 each on principal repayment (old regime only).

A couple owning a property 50:50 with a joint loan can together claim up to Rs 4,00,000 on interest and Rs 3,00,000 on principal repayment under the old regime.

Requirements:

• Both must be co-owners (names on the property deed).
• Both must be co-borrowers (names on the loan agreement).
• EMI payments should be traceable to each person's bank account.

Old Regime vs New Regime: What You Can Claim

Comparison

Home Loan Deductions: Old Regime vs New Regime

Deduction availability under Section 115BAC for FY 2026-27

Parameter	Old Tax Regime	New Tax Regime (115BAC)
Section 24(b): self-occupied interest	Allowed up to Rs 2,00,000/year	Not allowed
Section 24(b): let-out interest	Full interest, no cap	Full interest, no cap
Section 80C: principal repayment	Up to Rs 1,50,000/year	Not allowed
Section 80EE: extra Rs 50,000	Allowed (if loan in eligible window)	Not allowed
Section 80EEA: extra Rs 1,50,000	Allowed (if loan in eligible window)	Not allowed
Loss from house property set-off	Up to Rs 2,00,000 vs other income	No set-off; carry forward only
Best for	Self-occupied homeowners with large EMIs	Let-out landlords or small loans

Takeaway: For most self-occupied homeowners with significant loan interest, the old regime delivers substantially higher tax savings. Run the numbers under both regimes before filing your ITR.

Source: Section 24(b), Section 80C, Section 80EE, Section 80EEA, Section 115BAC, Income Tax Act 1961

The new tax regime (default from FY 2023-24) strips away the self-occupied interest deduction and all Chapter VI-A benefits including 80C, 80EE and 80EEA. The only home loan benefit that survives in the new regime is the Section 24(b) interest deduction on let-out property. If you have a self-occupied home with a large outstanding loan, opting for the old regime almost always makes more financial sense.

HRA and Home Loan: Can You Claim Both?

Yes. If you live in a rented house (say, because your workplace is in a different city) and also have a home loan on a property elsewhere, you can claim both HRA exemption under Section 10(13A) and home loan deductions under Sections 24(b) and 80C simultaneously.

The conditions are straightforward:

• You must actually be paying rent for the property you live in.
• The home loan property must be a different property (not the one you are renting).
• You must have genuine documentation for both: rent receipts or rental agreement for HRA, and the bank's interest certificate for the home loan.

This situation is common for salaried professionals posted in metros who own property in their hometown. See our HRA exemption guide for the detailed calculation.

Loss from House Property: The Rs 2 Lakh Set-Off Cap

Under Section 71(3A), the loss arising from house property (whether from self-occupied or let-out property) that can be set off against income from other heads (salary, business, capital gains) is capped at Rs 2,00,000 per year. This cap applies under both old and new regimes, though the new regime restricts the set-off further by blocking inter-head adjustment entirely.

Any unabsorbed loss beyond Rs 2,00,000 is carried forward for up to 8 assessment years, but can only be set off against future income from house property.

Documents You Need

Keep these ready for ITR filing and assessment:

• Home loan interest certificate from the bank (issued annually, splitting principal and interest).
• Loan sanction letter with sanction date, amount and terms.
• Property purchase deed or sale agreement showing ownership.
• Possession certificate or completion certificate (critical for pre-construction interest).
• Bank statements showing EMI debits (especially for joint loans).
• Rent agreement if the property is let out.
• Co-ownership deed if claiming as a joint borrower.

Common Mistakes to Watch For

• Claiming pre-construction interest in the year of payment. It is allowed only in 5 equal instalments after possession. Claiming it upfront leads to mismatch.
• Exceeding the Rs 2 lakh cap on self-occupied. The excess is simply lost; it cannot be carried forward for self-occupied property.
• Forgetting the 5-year possession rule. If construction is delayed beyond 5 years, the Section 24(b) limit drops to Rs 30,000 per year.
• Claiming 80C principal without old regime opt-in. Section 80C is blocked in the new regime. Filing without switching regimes means the claim is disallowed.
• Joint loan claims without matching ownership. Both co-borrowers must be co-owners. Claims must match the ownership ratio and traceable EMI payments.
• Claiming Section 80EE or 80EEA on ineligible loans. Verify the exact sanction date from your bank letter before claiming.

Where Tax Garden Helps

Home loan deductions span four sections, two tax regimes, pre-construction instalments, joint owner splits and loss set-off limits. Getting the full benefit requires reading the bank's interest certificate correctly, computing the pre-construction instalment, splitting deductions for joint borrowers, and comparing both regimes. Tax Garden's tax compliance services handle this end to end: we review your loan documents, compute the optimal deduction under each regime, and file your ITR correctly. For regime comparison, see our income tax slab rates guide.

Frequently Asked Questions

What is the maximum home loan interest deduction for a self-occupied property?

Rs 2,00,000 per year under Section 24(b), provided the property was acquired or constructed within 5 years from the end of the financial year in which the loan was taken. If the 5-year condition is not met, the cap drops to Rs 30,000.

Can I claim home loan principal repayment under Section 80C in the new tax regime?

No. Section 80C deductions are not available under the new tax regime (Section 115BAC). You must opt for the old regime to claim the Rs 1,50,000 principal repayment deduction.

Are Section 80EE and 80EEA still available for new home loans in FY 2026-27?

No. Section 80EE applied to loans sanctioned between April 2016 and March 2017. Section 80EEA applied to loans sanctioned between April 2019 and March 2022. Both windows have closed. However, if your loan was sanctioned during the eligible period, you continue to claim the deduction each year until the loan is repaid.

How is pre-construction interest treated for tax purposes?

Interest paid during the construction period is aggregated and allowed as a deduction in 5 equal annual instalments, starting from the financial year in which the property is completed. Each instalment is added to the current year interest and the total is subject to the Rs 2,00,000 cap for self-occupied property.

Can both co-borrowers of a joint home loan claim tax benefits?

Yes, if both co-borrowers are also co-owners of the property. Each can claim up to Rs 2,00,000 interest deduction under Section 24(b) and up to Rs 1,50,000 principal deduction under Section 80C (old regime), in proportion to their ownership share and EMI contribution.

Can I claim HRA exemption and home loan deduction at the same time?

Yes. If you live in a rented house and have a home loan on a different property, you can claim HRA exemption under Section 10(13A) along with Section 24(b) and Section 80C deductions. The properties must be different and you need documentation for both.

What happens if I sell the property within 5 years of buying it?

The Section 80C deductions claimed on principal repayment in all prior years are reversed and added back to your taxable income in the year of sale. Section 24(b) interest deductions already claimed are not reversed.

Sources

This guide is verified against Section 24(b), Section 80C, Section 80EE, Section 80EEA and Section 71(3A) of the Income Tax Act 1961, the Income Tax Department's published ITR instructions for AY 2026-27 on incometax.gov.in, and the corresponding provisions under Sections 20-22, 123 and Schedule XV of the Income Tax Act 2025. Practitioner references from ClearTax (cleartax.in/s/home-loan-tax-benefit), BankBazaar, Bajaj Finserv and Tax2Win were reviewed for confirmation. Always verify figures against your bank's interest certificate and sanction letter before filing.