The short answer
Under the old tax regime, a home loan gives two deductions: up to ₹1.5 lakh a year of principal repaid under section 80C, and up to ₹2 lakh a year of interest on a home you live in under section 24(b).
Under the new regime (the default since 2023-24, section 115BAC), neither deduction is available for a home you live in. Interest on a let-out home can still be set against its rent.
Principal: section 80C
The principal part of each EMI counts towards the ₹1.5 lakh section 80C limit, shared with provident fund, life insurance premiums and the rest. Stamp duty and registration paid on the purchase also count, in the year you pay them.
If you sell the home within five years of the end of the year you took possession, the 80C deductions you claimed are added back to your income in the year of sale.
Interest: section 24(b)
For a home you live in, interest is deductible up to ₹2 lakh a year. For a let-out home, all the interest is deducted from the rent, but a resulting loss can be set off against other income only up to ₹2 lakh a year (section 71(3A)); the rest is carried forward for up to eight years.
Interest paid before construction is complete is not lost: it is deducted in five equal parts starting from the year of completion, inside the same ₹2 lakh limit for a self-occupied home.
Joint home loans
When two people are co-owners and co-borrowers, each can claim their own share of principal and interest, each up to their own limits. Both conditions matter: a co-borrower who is not a co-owner cannot claim.
Old or new regime?
Work out your tax both ways each year. The deductions above only exist in the old regime, so for a large home loan on a home you live in, the old regime often comes out lower; for a small loan, the new regime's lower slab rates can win. Your employer lets you choose each year, and salaried taxpayers can switch when filing.
Common questions
Can I claim home loan interest under the new tax regime?
Not for a home you live in. For a let-out home, interest is deducted from the rent, but a loss from house property cannot be set off against salary or other income under the new regime.
Can both spouses claim the home loan deduction?
Yes, if both are co-owners and co-borrowers. Each claims their own share, each up to their own ₹1.5 lakh (80C) and ₹2 lakh (24(b)) limits under the old regime.
Is there a deduction for a first home?
Section 80EEA allowed extra interest of up to ₹1.5 lakh, but only on loans sanctioned up to 31 March 2022; it is closed to new loans.
Sources
- Income Tax Act, 1961: sections 24(b), 71(3A), 80C, 80EEA and 115BAC
- Check the current limits with the Income Tax Department or a chartered accountant before filing
Last checked 2026-10-01.