Home Loan Tax Benefits under Section 24(b) and Section 80C (FY 2025-26)

Section 24(b): deduction on home loan interest

• Self-occupied property: deduction of up to Rs 2 lakh per year on interest, provided the loan was taken for purchase or construction and the construction is completed within 5 years from the end of the financial year in which the loan was taken. If completion takes longer, the limit drops to Rs 30,000.
• Let-out (rented) property: the entire interest is deductible from rental income. However, the net house property loss that can be set off against salary or other income is capped at Rs 2 lakh a year; the unabsorbed loss is carried forward for up to 8 years against house property income only.
• Loans for repair or reconstruction of a self-occupied house qualify only up to Rs 30,000 (within the overall Rs 2 lakh cap).

Conditions for the full Rs 2 lakh interest deduction

Condition	If satisfied	If not satisfied
Loan taken for purchase or construction of the house	Up to Rs 2,00,000	Rs 30,000 (repair/renewal/reconstruction loans)
Loan taken on or after 1 April 1999	Up to Rs 2,00,000	Rs 30,000 for older loans
Construction/purchase completed within 5 years from the end of the FY in which the loan was taken	Up to Rs 2,00,000	Limit drops to Rs 30,000
Interest certificate obtained from the lender	Claim allowed	Claim may be questioned

Section 80C: principal repayment and stamp duty

• Principal repaid during the year qualifies under Section 80C within the overall limit of Rs 1.5 lakh (shared with PPF, ELSS, life insurance, etc.).
• Stamp duty and registration charges paid on purchase can also be claimed under Section 80C, but only in the year of payment.
• The benefit is available only after construction is complete, and the house should not be sold within 5 years of possession — otherwise earlier 80C deductions are reversed and taxed.

Limits at a glance

Benefit	Section	Maximum (old regime)
Interest – self-occupied house	24(b)	Rs 2,00,000 per year
Interest – let-out house	24(b)	Full interest; loss set-off capped at Rs 2,00,000
Principal repayment + stamp duty	80C	Rs 1,50,000 (overall 80C limit)
Pre-construction interest	24(b)	5 equal instalments, within the Rs 2 lakh cap

Worked examples

Old regime vs new regime

• Old regime: all benefits above are available — 24(b) interest, 80C principal and stamp duty.
• New regime (default): no Section 24(b) deduction for a self-occupied house and no 80C benefit. For a let-out house, interest is still deductible against rent, but a loss cannot be set off against other income or carried forward.
• If your home loan interest is large, compare both regimes on our income tax calculator or read our old vs new regime guide before filing.

How to claim home loan benefits in your ITR

1. Pick the right form: ITR-1 if you are salaried with one house property and no capital gains or carried-forward loss; otherwise ITR-2 — then file your income tax return online.
2. Confirm the old regime: opt out of the default new regime at the start of the return so Section 24(b) and 80C stay available.
3. Fill the house property schedule: select self-occupied or let-out. For self-occupied, enter the interest under "Interest payable on borrowed capital" (maximum Rs 2,00,000 including any pre-construction instalment). For let-out, enter rent received, municipal taxes and the full interest.
4. Give the lender details: from AY 2025-26 the ITR forms ask for a Section 24(b) break-up — name of the bank or institution, loan account number and the interest amount.
5. Claim the principal under 80C: in Schedule VI-A, enter the principal repaid plus any stamp duty and registration charges in the Section 80C field, within the Rs 1,50,000 ceiling.
6. Carry forward any excess loss: a let-out loss above Rs 2,00,000 goes to Schedule CFL of ITR-2 for future set-off. Cross-check with your AIS, then e-verify.

Documents to keep ready

• Home loan interest certificate from the bank/lender showing the interest and principal split for FY 2025-26
• Possession or completion certificate (to prove the 5-year construction condition)
• Sale deed, stamp duty and registration receipts (for 80C claims)
• Co-ownership proof and loan agreement showing the share of each joint borrower

Common mistakes to avoid

• Claiming the full Rs 2 lakh interest by both joint borrowers when EMIs are paid from only one person's account — each claim must match the actual share paid.
• Claiming 80C principal on an under-construction property — the 80C benefit starts only after completion, unlike pre-construction interest which is at least spread over 5 years.
• Forgetting that the Rs 2 lakh cap for a self-occupied house includes the pre-construction interest instalment.
• Selling the house within 5 years of possession and not reversing earlier 80C claims.
• Choosing the new regime by default and losing the entire 24(b) self-occupied benefit without comparing regimes first.

Frequently asked questions

How much home loan interest can I claim for FY 2025-26?

Under the old tax regime, Section 24(b) allows a deduction of up to Rs 2 lakh per year on home loan interest for a self-occupied house. For a let-out property the full interest is deductible, but the house property loss that can be set off against other income is capped at Rs 2 lakh per year.

Can I claim both Section 24(b) and Section 80C on the same home loan?

Yes. Interest qualifies under Section 24(b) (up to Rs 2 lakh for self-occupied) and principal repayment qualifies under Section 80C within the overall Rs 1.5 lakh limit. Together that is up to Rs 3.5 lakh of deductions in the old regime.

Is home loan interest allowed in the new tax regime?

For a self-occupied property, no deduction is allowed under Section 24(b) in the new regime. For a let-out property, interest can still be deducted from rental income, but any resulting loss cannot be set off against salary or other income.

How is pre-construction interest claimed?

Interest paid before the year the construction is completed is added up and claimed in five equal annual instalments starting from the year of completion. For a self-occupied house, the instalment plus the current year interest together cannot exceed the Rs 2 lakh cap.

Can both joint owners claim home loan tax benefits?

Yes, provided each person is both a co-owner of the property and a co-borrower who actually services the EMIs. Each co-borrower can then claim up to Rs 2 lakh under Section 24(b) and up to Rs 1.5 lakh under Section 80C on their own share of the interest and principal.

Which ITR form do I use to claim home loan benefits?

ITR-1 works if you are a salaried taxpayer with only one house property and no capital gains. If you own more than one house property, have a carried-forward house property loss, or have capital gains, you must use ITR-2.

Get expert-assisted filing

All India ITR can compute your exact Section 24(b) and 80C claim, split benefits correctly between joint owners, and pick the better regime for you before filing.

File with house property experts

Sources reviewed

• Income Tax Department – Salaried individuals for AY 2026-27 (deductions including Section 24(b) and 80C)
• Income Tax Department – ITR-2 user manual (house property schedule)
• India Code – Income-tax Act, 1961 (Sections 24 and 80C)

This guide is for general understanding. Interest apportionment for joint loans, under-construction property rules and let-out loss set-off depend on your facts — confirm your specific numbers with a tax expert before claiming.