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In summary
Home loan tax benefits reduce your taxable income and overall tax liability — making homeownership more affordable than renting for eligible taxpayers under the old tax regime. The key decision point is whether the total home loan deductions you can claim outweigh the standard deduction benefit available under the new regime.
This page covers:
- Home loan tax benefit summary table for FY 2026-27
- Deduction on principal repayment under Section 80C (up to Rs. 1.5 lakh)
- Deduction on stamp duty and registration charges under Section 80C
- Deduction on interest paid under Section 24(b) (up to Rs. 2 lakh for self-occupied)
- Additional deduction for first-time buyers under Section 80EE (up to Rs. 50,000)
- Additional deduction for affordable housing under Section 80EEA (up to Rs. 1.5 lakh)
- Impact of the new tax regime on home loan deductions
- Union Budget 2026 — housing policy direction
- Tax benefits for joint home loan holders
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What are the tax benefits on a home loan?
Home loan tax benefits are deductions available to borrowers under the Income Tax Act, 1961 that reduce their taxable income. These benefits apply to two components of a home loan: the principal repayment (under Section 80C) and the interest paid (under Section 24(b)). Additional deductions are available for first-time homebuyers under Sections 80EE and 80EEA. Together, these benefits can reduce taxable income by up to Rs. 5 lakh per year for eligible borrowers under the old tax regime.
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Home loan tax benefits under different sections for FY 2026-27
| Section | Maximum deduction per year | Applicable to | Key condition |
|---|---|---|---|
| Section 24(b) | Up to Rs. 2 lakh | Interest on home loan | Self-occupied property; construction must be completed within 5 years |
| Section 80C | Up to Rs. 1.5 lakh | Principal repayment + stamp duty + registration | Combined limit with all other 80C investments |
| Section 80EE | Up to Rs. 50,000 | Interest (additional) | First-time buyer; loan ≤ Rs. 35 lakh; property value ≤ Rs. 50 lakh |
| Section 80EEA | Up to Rs. 1.5 lakh | Interest (additional) | First-time buyer; stamp duty value ≤ Rs. 45 lakh; loan sanctioned Apr 2019 to Mar 2022 |
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Deduction on principal repayment under Section 80C
Section 80C is one of the most widely used tax sections. It allows a maximum deduction of Rs. 1.5 lakh per year on principal repayment of a home loan. This limit is shared with other 80C investments such as PPF, ELSS, life insurance premiums, and NSC. If you have other 80C investments, the benefit from principal repayment is limited to the remaining headroom within the Rs. 1.5 lakh cap.
Key points:
- Applicable to the principal component of your home loan EMI
- Applies to both self-occupied and rented properties
- Only available under the old tax regime — not under the new tax regime
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Deduction on stamp duty and registration charges under Section 80C
Under Section 80C, you can also claim a deduction on stamp duty and registration charges paid while purchasing a house. This deduction:
- Is available up to Rs. 1.5 lakh (within the overall 80C limit)
- Can only be claimed in the year these expenses are incurred — not in subsequent years
- Applies to individuals and Hindu Undivided Families (HUFs) buying a new residential property
- Is subject to a 5-year lock-in: if the property is sold within 5 years, the deduction claimed is reversed
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Deduction on home loan interest under Section 24(b)
Section 24(b) allows deductions on the interest component of your home loan EMI:
| Property type | Maximum deduction | Condition |
|---|---|---|
| Self-occupied property | Up to Rs. 2 lakh per year | Construction completed within 5 years of loan disbursement |
| Self-occupied (construction delayed beyond 5 years) | Up to Rs. 30,000 per year | Reduced limit applies |
| Let-out or deemed let-out property | No upper cap | Full interest deductible; set-off against other income limited to Rs. 2 lakh per year |
For let-out properties, if the net income from house property results in a loss after deducting interest, this loss can be set off against other house property income — but cannot be adjusted against salary or other sources.
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Additional deduction for first-time buyers under Section 80EE
Section 80EE offers an extra Rs. 50,000 deduction on interest paid — over and above Section 24(b). Eligibility conditions:
- First-time homebuyer — must not own any residential property on the loan sanction date
- Loan amount: must not exceed Rs. 35 lakh
- Property value: must not exceed Rs. 50 lakh
- Loan sanction period: specified by the government (applicable for loans sanctioned in the prescribed period)
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Additional deduction for affordable housing under Section 80EEA
Section 80EEA provides an additional Rs. 1.5 lakh deduction on home loan interest for affordable housing. This is over and above Sections 24(b) and 80EE. Conditions:
- First-time homebuyer
- Stamp duty value of the property must not exceed Rs. 45 lakh
- Loan must be sanctioned between 1 April 2019 and 31 March 2022
- The taxpayer must not own any other residential property on the loan sanction date
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How does the new tax regime affect home loan tax benefits?
Under the new tax regime (which offers lower slab rates but fewer deductions), most home loan benefits are unavailable:
| Benefit | Old tax regime | New tax regime |
|---|---|---|
| Section 80C (principal + stamp duty) | Available — up to Rs. 1.5 lakh | Not available |
| Section 24(b) for self-occupied property | Available — up to Rs. 2 lakh | Not available |
| Section 24(b) for let-out property | Available — no cap, set-off limited | Available — deductible against house property income only |
| Section 80EE and 80EEA | Available (subject to conditions) | Not available |
The new regime is beneficial if your total deductions (80C, 24b, 80EE, 80EEA, 80D etc.) are less than the standard deduction benefit of Rs. 75,000. Run a comparison before choosing your regime each year.
What did Union Budget 2026 say about home loan tax benefits?
The Union Budget 2026-27 maintained a balanced fiscal approach without introducing major structural changes to home loan tax provisions. The existing deduction limits under Sections 24(b), 80C, and 80EEA remain unchanged. The government's focus continues to be on sustaining housing demand and supporting affordable housing initiatives — providing stability for buyers planning their finances around home loan EMIs and tax savings.
Can joint home loan holders both claim tax benefits?
Yes. When a property is jointly owned and jointly financed:
- Each co-owner can claim up to Rs. 2 lakh on interest under Section 24(b), subject to their ownership ratio
- Each co-owner can claim up to Rs. 1.5 lakh on principal repayment under Section 80C, subject to ownership ratio
- The combined deductions effectively double the tax benefit for the household compared to a single borrower
Both applicants must be co-owners of the property, co-borrowers on the loan, and actively paying their respective share of EMIs to claim individual deductions.
Home loan tax benefits can save eligible borrowers Rs. 50,000 to Rs. 1.5 lakh or more in taxes annually — making a home loan one of the most tax-efficient financial products available. To maximise your benefit, structure your loan to align the EMI payments with your annual deduction limits. Bajaj Housing Finance offers home loans from 7.25% p.a.* p.a.* with amounts up to Rs. Rs. 15 Crore* and tenures up to 32 years years. Check your eligibility today.
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What is the maximum amount of tax deductible for a home loan?
The maximum tax deductible for a home loan is listed below under specified sections of the Income Tax Act 1961.
- Up to Rs. 2 lakh u/s 24 for self-occupied house; no limit for non-self-occupied house
- Up to Rs. 1.5 lakh u/s 80C
- Up to Rs. 1.5 lakh u/s 80EEA for first-time home buyers
Who is eligible to claim tax exemptions on home loans?
A person who has purchased a new house for self-occupation or to rent out can claim tax exemption on home loans u/s 24, 80C and 80EEA of the Income Tax Act, 1961. You can also claim tax benefits if you are a co-owner of the house or a co-borrower.
Which is better - home loan or a mortgage loan?
Can I claim home loan tax benefits on an under-construction property?
Yes, you can claim home loan tax benefits for a property under construction u/s 24. The following rules apply to such a deduction.
If the construction is completed within 5 years, a deduction of Rs. 2 lakh is applicable
For constructions not completed within 5 years, only up to Rs. 30,000 is deductible
Take advantage of these tax savings by applying for a Bajaj Finserv Home Loan with approval in just 48 hours*. You may already be eligible, check your loan offers by entering your mobile number and OTP.
Is home loan protection insurance tax deductible?
Premiums paid for a home loan protection insurance plan are tax deductible under section 80C of the Income Tax Act, 1961 only if the borrower makes repayment. Under specific circumstances, where the lender finances such an insurance plan and the borrower repays via loan EMIs, deductions are not allowed.
Is a top-up loan eligible for tax deduction?
A home loan top-up is eligible for tax deduction u/s 24(b) and 80C only if it is used for:
- Acquisition/ construction of a residential property
- Renovation or repair of such property
Such a claim should also be backed up with valid receipts and documents.
How can I calculate tax benefits on a home loan
An income tax calculator is one of the best tools to compute the tax benefits without any hassle. It is an online tool that instantly calculates the amount based on certain home loan details. Some of these include home loan amount, rate of interest, existing tax deductions, and gross annual salary. Simply enter the details required and check the tax benefits that you can avail.
To calculate your tax benefits accurately, start with securing the right home loan. Check your eligibility for a Bajaj Housing Finance Home Loan with low EMIs starting at just Rs. 741/lakh. You may already be eligible, find out by entering your mobile number and OTP.
Is home loan interest tax-deductible in 2024-25?
Yes, in addition to the deductions of up to Rs. 1.5 lakh on principal repayments, homet buyers can get extra tax benefit on the interest payments.
Can I claim tax benefits under both Sections 80EE and 24 of IT Act?
If an applicant satisfies the requirements of both Sections 80EE and 24 of the I-T Act, they must first exhaust the limit under Section 24, then claim benefits of home loan interest deduction under Section 80EE.
Can I claim a home loan tax rebate for a joint home loan?
Joint home loan borrowers can claim individual home loan rebates in income tax up to Rs. 2 lakh on interest paid and Rs. 1.5 lakh on the principal amount.
Can I claim both Section 24 and 80EE?
You can claim both Section 24 and Section 80EE deductions simultaneously if you meet their eligibility criteria.
- Under Section 24, you can claim up to Rs. 2 lakh deduction on home loan interest for a self-occupied or rented property, subject to conditions.
- Under Section 80EE, first-time homebuyers can claim an extra deduction of up to Rs. 50,000 on home loan interest, over and above Section 24, with specific conditions:
- The homebuyer should be a first-time buyer
- Property value should not exceed Rs. 50 lakh
- Loan amount should not exceed Rs. 35 lakh
- The loan should be sanctioned between specific financial years notified by the government
Is home loan interest tax-deductible in 2025-26?
Under India's new tax regime for FY 2025-26, home loan interest is not tax-deductible for self-occupied properties. However, interest on loans for let-out properties remains deductible.
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