How much home loan interest can I claim?

Up to ₹2,00,000 a year for a self-occupied house under the old regime. For a let-out house the full interest is deductible against rent in both regimes, but only the old regime lets a loss reduce your salary, up to ₹2,00,000.

Can I claim home loan benefits in the new regime?

Not for a house you live in. For a let-out house, interest can be deducted from the rent, but a loss cannot be set off against salary.

Can I claim HRA and home loan interest together?

Yes, under the old regime, if you genuinely live in a rented house, for example because your own house is in another city or is let out.

What if construction is delayed beyond five years?

The interest limit for a self-occupied house falls from ₹2,00,000 to ₹30,000 a year if construction is not completed within five years from the end of the year the loan was taken.

Home loan tax benefits

Updated 11 October 2026

A home loan gives two main tax benefits under the old regime: a deduction of up to ₹2,00,000 a year for interest on a house you live in, and up to ₹1,50,000 for principal repayment under section 80C. The new regime gives neither for a self-occupied house, but still lets you deduct interest on a rented-out house against its rent. Under the Income-tax Act, 2025, the interest deduction (the old section 24(b)) is now section 22(1)(b) and 80C is section 123.

Interest deduction

Interest is deducted under the head "income from house property". The rules depend on how the house is used:

House	Old regime	New regime
Self-occupied (you live in it)	Interest up to ₹2,00,000 a year	Not allowed
Let out	Full interest against rent; a resulting loss can be set off against salary up to ₹2,00,000, the rest carried forward	Interest allowed against rent, but a loss cannot be set off against salary or other income

The ₹2,00,000 limit on a self-occupied house applies only if the loan was taken for buying or building the house and construction is completed within five years from the end of the year the loan was taken. Otherwise the limit drops to ₹30,000. A loan for repairs or renovation also gets only ₹30,000.

Interest before possession

Interest paid while the house is under construction cannot be claimed in those years. Instead, the total pre-construction interest is claimed in five equal parts, starting from the year construction is completed. For a self-occupied house, these instalments share the same ₹2,00,000 yearly limit.

Principal repayment

The principal part of your EMI counts under section 80C, along with stamp duty and registration charges in the year you pay them. It shares the ₹1,50,000 limit with EPF, PPF, insurance and everything else, so if your EPF already uses most of the limit, principal repayment adds little.

If you sell the house within five years from the end of the year you got possession, the 80C deductions claimed for principal are reversed and added back to your income in the year of sale.

Worked example

Worked example. Suresh lives in the flat he bought with a loan. This year his EMIs include ₹2,40,000 of interest and ₹1,10,000 of principal. His EPF is ₹40,000. He is in the 30% slab under the old regime.
Interest deduction = ₹2,00,000 (capped; ₹40,000 of interest gets no benefit).
80C = EPF ₹40,000 + principal ₹1,10,000 = ₹1,50,000 (exactly the limit).
Deductions linked to the loan = ₹2,00,000 + ₹1,10,000 = ₹3,10,000.
Tax saved = 30% of ₹3,10,000 = ₹93,000, plus 4% cess of ₹3,720, so ₹96,720 a year.
In the new regime the same loan saves him nothing, so he should compare both regimes before choosing.

Joint home loans

If a house is owned jointly and both owners are co-borrowers who pay the EMIs, each can claim up to ₹2,00,000 of interest and their share of principal within their own ₹1,50,000 limit. This is why couples often take a joint loan: two people can claim up to ₹4,00,000 of interest between them. Being a co-borrower without being a co-owner does not give the deduction.

Let-out property

For a let-out house, the taxable income is the rent received minus municipal taxes paid, minus a flat 30% standard deduction for repairs, minus the full interest on the loan. If interest is larger than the rent, the result is a loss.

Old regime: up to ₹2,00,000 of that loss can reduce your salary income. The rest is carried forward for up to eight years, to be set off against future house property income.
New regime: the loss cannot reduce your salary or other income.

Older special deductions for first-time buyers (the former 80EE and 80EEA) applied only to loans sanctioned within specific past windows. If you have such a loan, check with a tax adviser whether you can still claim it.

Which regime is better with a home loan?

A home loan is one of the biggest reasons people stay in the old regime. If you have a large interest bill plus full 80C, HRA (if you rent in another city) and 80D, the old regime can win even at moderate incomes. If your loan is nearly paid off and the interest is small, the new regime's lower slabs and the rebate up to ₹12 lakh of taxable income usually win. Put your numbers into the income tax calculator and read old vs new regime.

Paperwork

Get the interest certificate from your lender for the year (most banks let you download it), and give it to your employer so your TDS is lower.
For the pre-construction claim, keep the year-wise interest statements and the completion or possession certificate.
If you claim HRA and home loan interest together (for example, you rent in the city where you work and own a house elsewhere), keep evidence of why you live in a rented house.