Home Loan Tax Benefits FY 2026-27 — 24(b), 80C and Joint Loans

• Limit: ₹2 lakh a year in total for up to two self-occupied houses.
• Condition: the loan must be for buying or building the house, and construction must finish within 5 years from the end of the financial year in which the loan was taken. Otherwise, and for loans taken for repairs, the cap is ₹30,000.
• Pre-construction interest: interest paid before possession is deductible in five equal instalments from the year construction is completed — within the same ₹2 lakh cap for a self-occupied home.
• Regime: old regime only.

The principal part of your EMIs counts towards the ₹1.5 lakh 80C limit, along with stamp duty and registration charges in the year you pay them. The limit is shared with EPF, PPF, ELSS, life insurance and tuition fees, so many salaried people find it already full — see the full 80C list. If you sell the house within 5 years of possession, principal deductions claimed earlier are added back to income.

A note on law: the Income-tax Act, 2025 took effect on 1 April 2026 and renumbers sections. The deductions described here carry over in substance; we use the familiar 24(b) and 80C names because that is how most people search for them.

The EMI is about ₹43,400 a month. In the first year, about ₹4.21 lakh of what you pay is interest and only about ₹99,500 is principal. All figures are illustrations; your lender's schedule will differ slightly.

• Single borrower, old regime: interest deduction is capped at ₹2 lakh, so about ₹2.21 lakh of first-year interest gets no benefit. With ₹99,500 of principal under 80C (if the limit has room), total deductions are about ₹3 lakh, worth roughly ₹93,400 of tax in the 30% slab including cess.
• Single borrower, new regime: no deduction for a self-occupied home.

See the amortisation table on the ₹50 lakh home loan EMI page, or model your own loan in the Home Loan EMI calculator.

If two people are both co-owners of the property and co-borrowers on the loan, and both contribute to the EMIs, each can claim their share of interest up to ₹2 lakh and their share of principal within their own ₹1.5 lakh 80C limit. In the example above, with 50:50 ownership, each partner pays about ₹2.11 lakh of interest in year one and claims ₹2 lakh — a combined ₹4 lakh instead of ₹2 lakh. Add the principal, and joint deductions are about ₹5 lakh. If both are in the 30% slab and in the old regime, that is worth about ₹1.56 lakh of tax in year one.

Being only a co-borrower without ownership, or only a co-owner without paying, does not qualify. Each person also chooses their own regime; if one picks the new regime, only the other gets the self-occupied benefit.

For a rented-out house, there is no ₹2 lakh cap on interest. Income from the property is worked out as rent received, minus municipal taxes, minus a flat 30% standard deduction, minus the full interest paid. If interest is larger, you have a loss from house property:

• Old regime: up to ₹2 lakh of that loss can be set off against salary or other income each year; the rest can be carried forward for 8 years against future house-property income.
• New regime: interest is still deductible against the rental income, but the loss cannot be set off against salary and cannot be carried forward.

Principal repayment on a let-out property still falls under 80C, so it helps only in the old regime.

A home loan does not automatically make the old regime better. The old regime has higher slab rates; you need large total deductions — interest, 80C, 80D, HRA if eligible, NPS — to beat the new regime's ₹75,000 standard deduction and lower slabs. Interest falls each year as the loan amortises, so the benefit shrinks over time. Compare both every year with the old vs new regime tool and the Income Tax calculator. If you are still deciding whether to buy at all, read rent vs buy.

Estimate your EMI and the interest-principal split for each year in the Home Loan EMI calculator.