Tax3 min read · Updated 17 October 2026
Home loan tax benefits in 2026: old vs new regime, in plain words
How much tax can a home loan save? The ₹2 lakh interest and ₹1.5 lakh principal limits, what changes under the new regime and the new Income-tax Act 2025.
What you can claim
| Benefit | Limit | Old regime | New regime |
|---|---|---|---|
| Interest, self-occupied home (Section 24(b) in the old Act) | ₹2,00,000 a year | Yes | No |
| Interest, let-out home | No cap on interest, but the loss you can set off against other income is limited | Yes | Yes (set off only against house property income) |
| Principal repaid (Section 80C in the old Act) | ₹1,50,000 a year, shared with PF, ELSS, insurance and other 80C items | Yes | No |
| Stamp duty and registration (in the year of purchase) | Inside the same ₹1.5 lakh limit | Yes | No |
Special extra deductions for first-time buyers (Section 80EE and 80EEA) applied only to loans sanctioned in set periods, and have ended for new loans.
How much tax it really saves
A deduction saves tax at your slab rate, not rupee for rupee. For someone in the 30% slab plus 4% cess:
- Interest of ₹2,00,000 saves about ₹62,400.
- Principal of ₹1,50,000 saves up to about ₹46,800, but only if you have not already used the 80C limit through PF or other investments. Most salaried people have.
If you are in the 20% or 5% slab, the saving is smaller. Our Cost after tax tool works out the net cost of your loan after the deduction.
Old regime or new regime?
The new regime has lower slab rates but removes most deductions. It tends to win when your total deductions are small. The old regime tends to win when your deductions (home loan interest, 80C, health insurance, HRA and others) are large. The break-even depends on your income, so compute both. A home loan alone rarely decides it.
Joint loans and pre-construction interest
- Joint loan: each co-borrower who is also a co-owner can claim their own share, up to ₹2 lakh of interest and ₹1.5 lakh of principal each, under the old regime. Both must pay the EMI and be on the loan and the property.
- Interest before you get possession: claimed in five equal yearly parts, starting from the year you get possession.
- Selling within five years of possession reverses the principal deduction you claimed under 80C.
The new Income-tax Act, 2025
The Income-tax Act, 2025 replaces the 1961 Act and applies from tax year 2026-27 (assessment year 2027-28). The deductions above continue in substance, but section numbers are different. The rules in this post describe the position as widely explained; check the exact new section numbers and any change with a chartered accountant or the Income Tax Department before you file.
What you need to claim
- Your lender's home loan interest certificate for the financial year.
- Proof of possession or construction completion.
- Your PAN and the lender's details in your return.
Common questions
How much tax can I save on a home loan?
Under the old regime, up to ₹2 lakh of interest on a self-occupied home and up to ₹1.5 lakh of principal inside the 80C limit. In the 30% slab, ₹2 lakh of interest saves about ₹62,400. Under the new regime you get no deduction on a self-occupied home.
Can I claim home loan interest in the new tax regime?
Not for a self-occupied home. Interest on a let-out property can be deducted, but any loss can be set off only against house property income.
Do both husband and wife get the ₹2 lakh deduction?
Yes, if both are co-owners and co-borrowers and both pay EMIs, each can claim up to ₹2 lakh of interest and ₹1.5 lakh of principal under the old regime.
Is the home loan tax benefit changing with the Income-tax Act 2025?
The Act replaces the 1961 Act with new section numbers. Check the current position with a CA before filing.