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Home loan tax benefits

A home loan splits into two different deductions under two different sections, with two different limits — and for a self-occupied property, both require the old regime.

Add home-loan interest to my tax

What it means

Interest on a housing loan for a self-occupied property is deductible up to ₹2,00,000 a year under Section 24(b). The principal repaid counts inside the ₹1,50,000 Section 80C umbrella, alongside provident fund and other 80C items.

The formula

Benefit = min(interest, ₹2,00,000) under 24(b) + principal within the 80C cap

Because principal shares the 80C umbrella with provident fund, most borrowers find the interest limb far more valuable. In the early years of a loan, interest dominates the EMI, so the ₹2 lakh ceiling is usually reached comfortably.

Worked example

  • Interest paid ₹2,40,000 → deduction capped at ₹2,00,000.
  • At a 31.2% marginal rate that saves about ₹62,400 in tax.
  • Principal ₹1,10,000 competes with your ₹96,000 provident fund inside the same ₹1.5 lakh limit.

How to use it

  1. 1Split your EMI. Your lender's annual statement separates interest and principal.
  2. 2Claim interest under 24(b). Capped at ₹2,00,000 for a self-occupied property.
  3. 3Fit the principal into 80C. Only what remains after provident fund fills the umbrella.

Frequently asked questions

Can I claim home loan interest in the new tax regime?

Not for a self-occupied property. The Section 24(b) deduction for self-occupied houses is unavailable under the new regime; interest on a let-out property follows different rules.

Can I claim both HRA and home loan benefits?

Yes, where the facts support it — for instance if you rent in the city you work in while owning a house elsewhere, or your own house is genuinely not occupiable by you. Both claims must be defensible on the facts.

Is the ₹2 lakh limit per person or per property?

Per taxpayer. Co-borrowers who are also co-owners can each claim up to ₹2,00,000 on their share of the interest.

Related tools & guides

Calculations on this site are based on official government provisions and should be verified against the latest government publications (incometax.gov.in).