Home Loan Tax Benefits — Section 24(b), 80C & 80EEA Guide (Tax Year 2026-27)

Updated: 3 June 2026 | Income-tax Act, 2025 | Verified against CBDT notifications

A home loan provides 3 types of tax deductions under the old regime: (1) Section 24(b) — interest deduction up to ₹2,00,000 per year for a self-occupied property; (2) Section 80C — principal repayment up to ₹1,50,000 (combined with other 80C investments); (3) Section 80EEA — additional ₹1,50,000 for first-time buyers where stamp duty value of property is ₹45 lakh or less (loan sanctioned between 1 Apr 2019 – 31 Mar 2022). None of these are available under the new tax regime.

₹5L MAX

Total max home loan deduction under old regime
₹2L Section 24(b) interest + ₹1.5L Section 80C principal + ₹1.5L Section 80EEA (if eligible first-time buyer) = up to ₹5L in total deductions per year.

Section 24(b)

₹2,00,000

Interest on home loan (self-occupied). Unlimited for let-out property.

Section 80C

₹1,50,000

Principal repayment. Combined with other 80C investments (PPF, ELSS, etc.).

Section 80EEA

₹1,50,000

Additional interest deduction. First-time buyers only. Stamp duty ≤ ₹45L.

Terminology note: Under the Income-tax Act, 2025 (effective 01-Apr-2026), the correct term is Tax Year 2026-27. Legacy searches for "home loan tax benefit AY 2026-27" or "home loan interest deduction FY 2025-26" refer to the same Tax Year.

Home Loan Tax Deductions — Complete Summary

Section	Deduction for	Head	Limit	Key Condition
Section 24(b)	Interest on home loan	Income from House Property	₹2,00,000 (self-occ.) / Unlimited (let-out)	Property must be acquired/constructed within 5 years of loan
Section 80C	Principal repayment	Chapter VI-A deduction	₹1,50,000 (combined 80C)	Property not sold within 5 years of possession
Section 80EEA	Interest — first-time buyer	Additional deduction	₹1,50,000 additional	Stamp duty ≤ ₹45L, no other house, loan sanctioned 1 Apr 2019 – 31 Mar 2022
Section 80EE	Interest — first-time buyer (older)	Additional deduction	₹50,000	Loan sanctioned 1 Apr 2016 – 31 Mar 2017 only (outdated; claim if applicable)

Under-Construction Property — Pre-Construction Interest

If you took the loan before the property was complete, you paid interest during the construction period. This pre-construction interest cannot be claimed in those years, but is allowed in 5 equal instalments starting from the year of possession completion.

Formula: Total pre-construction interest ÷ 5 = annual deductible amount (still subject to the overall ₹2 lakh Section 24(b) cap).

Let-Out Property — Interest Deduction Rules

For a let-out or deemed let-out property, the ₹2 lakh cap does not apply — the full interest paid is deductible from rental income. However:

If interest exceeds rental income, a loss from house property arises.
This loss can be set off against other income heads only up to ₹2 lakh per year.
Balance unabsorbed loss is carried forward for 8 assessment years and can only be set off against future house property income.

Frequently Asked Questions

Can I claim home loan interest deduction under the new tax regime?

No. Section 24(b) home loan interest deduction is not available under the new tax regime. It is only available under the old regime. Similarly, Section 80C principal repayment and Section 80EEA are also not available under the new regime. If you have a large home loan, the old regime may still be beneficial despite higher slab rates.

I have 2 home loans — can I claim deduction for both?

Section 24(b): The ₹2 lakh cap applies per taxpayer (not per property) for self-occupied properties. You can designate only one property as self-occupied; the second is treated as deemed let-out. For the deemed let-out property, full interest is deductible without the ₹2L cap. However, total loss from house property set off against other income is still capped at ₹2L per year; the balance is carried forward for 8 years.

Joint home loan — who claims the deduction?

Each co-borrower who is also a co-owner of the property can independently claim deductions proportional to their ownership share, within limits. For example, with 50-50 ownership, each co-owner can claim up to ₹1L interest under Section 24(b) and up to ₹75,000 principal under Section 80C. Joint claims can effectively double the total household deduction.

Is stamp duty eligible for 80C deduction?

Yes. Stamp duty and registration charges paid during property purchase are eligible for Section 80C deduction within the overall ₹1.5 lakh limit, in the year of payment. This applies even if the property is under construction. However, the deduction is only available in the year the stamp duty is actually paid.

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

If you sell the property within 5 years from the end of the financial year in which possession was taken, all Section 80C deductions claimed for principal repayment and stamp duty in prior years are reversed — the total amount is added back to your income in the year of sale and taxed accordingly. The Section 24(b) interest deductions are not reversed.

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