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Section 24 — Home Loan Interest Deduction
Updated: 3 June 2026
Section 24(b) allows deduction of home loan interest: up to ₹2,00,000 per year for self-occupied property (old regime only) and unlimited for let-out property. Section 24(a) provides a mandatory 30% standard deduction on Net Annual Value of any rented house property.
₹2L
Maximum interest deduction under Section 24(b) for a self-occupied property under the old tax regime. No limit applies for let-out properties.
Two Sub-Sections Under Section 24
Section 24(a) — Standard Deduction: A flat 30% deduction on the Net Annual Value (NAV) of house property is allowed automatically. NAV = Gross Rent − Municipal Taxes paid by owner. No bills or proof needed — it is deducted as a matter of right. This covers repairs, insurance, and maintenance notionally.
Section 24(b) — Interest on Borrowed Capital: Actual interest paid or accrued on a loan taken to purchase, construct, repair, renew, or reconstruct a house property. The deductibility and limits differ based on whether the property is self-occupied or let out.
Section 24 Deduction — Self-Occupied vs Let-Out
Parameter
Self-Occupied Property
Let-Out Property
Annual Value (AV)
Nil (deemed zero)
Actual rent received / expected rent
Sec 24(a) — 30% Std. Deduction
Not applicable (AV = 0)
30% of NAV (mandatory)
Sec 24(b) — Interest Deduction
Up to ₹2,00,000 p.a.
Unlimited (full interest)
Pre-construction Interest
5 equal instalments (₹2L cap combined)
5 equal instalments (no cap)
Loss Set-Off vs Other Income
Up to ₹2 lakh p.a.
Up to ₹2 lakh p.a.
Carry Forward of Remaining Loss
Up to 8 years (HP head only)
Up to 8 years (HP head only)
Available in New Tax Regime?
No
Yes (mandatory adjustment)
Step-by-Step: Computing Tax on Let-Out Property
Step
Item
Amount
1
Gross Annual Value (annual rent received)
₹3,60,000
2
Less: Municipal Taxes paid by owner
₹12,000
3
Net Annual Value (NAV) = Step 1 − Step 2
₹3,48,000
4
Less: Section 24(a) — 30% of NAV
₹1,04,400
5
Less: Section 24(b) — Home Loan Interest
₹2,80,000
6
Income/(Loss) from House Property
(−₹36,400)
7
Set-off against Salary income (max ₹2L)
−₹36,400
In this example, the loss is within ₹2L limit and fully set off against salary. If loss were ₹2.5L, only ₹2L would set off; ₹50,000 carried forward.
Pre-Construction Interest — How It Works
Pre-construction interest is the total interest paid from the date of first loan disbursement up to 31 March of the financial year immediately preceding the year of possession/completion. This total is split equally over 5 years and deducted as part of the annual Section 24(b) limit starting from the year of completion.
Example: Loan disbursed April 2021; possession in October 2024 (FY 2024-25). Pre-construction period = April 2021 to March 2024. Total pre-construction interest = ₹6,00,000. Annual installment = ₹1,20,000/year for FY 2025 to FY 2029. This ₹1.2L is added to current year's post-construction interest when computing the ₹2L cap for self-occupied property.
Frequently Asked Questions
What is the maximum Section 24 deduction on home loan interest?
Under Section 24(b), the maximum interest deduction depends on property type: for a self-occupied property, the limit is ₹2,00,000 per financial year. For a let-out (rented) property, there is NO upper limit — the full interest paid can be deducted from house property income, which can result in a loss. However, such loss from house property can only be set off against other income heads (salary, business, etc.) up to ₹2 lakh per year; the remaining loss is carried forward for 8 years.
Can I claim Section 24 home loan deduction in the new tax regime?
Partially. Under the new tax regime, Section 24(b) deduction for a self-occupied property is NOT available — the ₹2 lakh interest deduction cannot be claimed. However, for let-out (rented) property, the Net Annual Value (NAV) calculation still applies — you deduct municipal taxes and 30% standard deduction under Sec 24(a), and interest under Sec 24(b) from rental income to arrive at income from house property. This is not optional; it is a mandatory adjustment even in the new regime. The loss set-off against other income remains restricted to ₹2L even in the new regime.
What is pre-construction interest deduction under Section 24?
Pre-construction interest refers to interest paid on the home loan during the period before the construction is completed (from loan disbursement to March 31 of the year preceding the year of completion). This total pre-construction interest is not deductible in one shot. Instead, it is divided into 5 equal installments and deducted over 5 consecutive financial years starting from the year the construction is completed. For a self-occupied property, the combined pre and post-construction interest deduction remains capped at ₹2 lakh per year.
What is the difference between Section 24 and Section 80EEA?
Section 24(b) allows deduction of up to ₹2 lakh on home loan interest for self-occupied property (unlimited for let-out). Section 80EEA was an additional deduction of ₹1.5 lakh for first-time home buyers of affordable housing (stamp duty value ≤ ₹45 lakh), available only in old regime. Together, an eligible buyer could claim up to ₹3.5 lakh in interest deductions. However, Section 80EEA was discontinued after FY 2021-22 — loans sanctioned after 31 March 2022 cannot claim 80EEA. Section 24 continues to be available under old regime without sunset.
What happens if construction is not completed within 5 years for self-occupied property?
If the house construction is not completed within 5 years from the end of the financial year in which the loan was taken, the Section 24(b) interest deduction for a self-occupied property is reduced drastically from ₹2,00,000 to just ₹30,000 per year. This is a significant penalty for construction delays or disputed projects. The 5-year clock starts from the end of the FY in which the loan was first disbursed. For loans taken in FY 2020-21, construction must be complete by 31 March 2026 to claim the full ₹2 lakh deduction.
