What you can claim
| Old regime | New regime | |
|---|---|---|
| Interest, home you live in | Up to ₹2 lakh a year (section 24(b)) | Nothing |
| Interest, let-out home | All of it, against the rent | All of it, against the rent |
| Loss from house property against salary | Up to ₹2 lakh a year; the rest carried forward 8 years | Not allowed |
| Principal repaid | Within 80C, up to ₹1.5 lakh | Nothing |
Interest before you get the keys
Interest paid before construction is completed is added up and claimed in five equal parts, starting the year you get possession, within the same limits.
A let-out home
Rent, less municipal tax, less a flat 30% for repairs, less all the home loan interest, is your income from the property. If the interest is larger than the rent, that's a loss: in the old regime up to ₹2 lakh of it reduces your salary income, and in the new regime it can't.
Does a home loan make the old regime better?
Often, when interest and your other deductions together are large. At a ₹15 lakh salary, the old regime needs about ₹5.44 lakh of deductions to win; a full ₹2 lakh of interest plus ₹1.5 lakh of 80C covers most of that. Compare both with your own numbers in the income tax calculator.
Prepaying
Banks can't charge you for prepaying a floating-rate home loan, under RBI rules. Prepaying early saves the most interest: ₹5 lakh prepaid after 3 years on a ₹50 lakh, 20-year loan at 8.5% saves about ₹13.2 lakh. Less interest also means a smaller section 24 deduction, so in the old regime check that you're not giving up tax savings you need.
Common questions
Can I claim home loan interest in 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 can't reduce your salary income.
How much home loan interest can I claim in the old regime?
Up to ₹2 lakh a year for a home you live in. For a let-out home, all of it, with up to ₹2 lakh of any loss set against your salary.
Does home loan principal save tax?
Yes, in the old regime, within the ₹1.5 lakh 80C limit shared with PF, PPF, insurance and others.
Can I claim interest paid before possession?
Yes. It's claimed in five equal parts, starting the year you get possession, within the same limits.
Two ways to sort this
Do it yourself
- Get the interest certificate for the year from your lender.
- Compare both regimes with the interest, principal and your other deductions.
- Give your employer the certificate so TDS reflects it, if you're in the old regime.
- For a let-out home, report rent, municipal tax and interest in your return.
Let an expert do it
We compare both regimes with your loan, and claim pre-construction interest and joint-loan shares correctly.
The first chat is freeWork it out for yourself
- Home loan EMI: EMI, interest and the tax you save on a home loan.
- EMI: Monthly instalment on any loan.
- Home loan eligibility: How much you can borrow on your salary.
- Loan prepayment: Interest saved by prepaying your loan.
- Home loan part payment: Lower EMI or shorter tenure after a part payment.
- Home loan balance transfer: Is switching your home loan worth it?
- Interest-free home loan: Earn back your home loan interest with a SIP.
- Prepay or invest?: Prepaying your loan or investing the money.
- Rent or buy?: Compare renting with buying a home.
- House property income: Income or loss from a home you own or rent out.
- Rental yield: Gross and net yield on a rented property.
See your EMI and the tax your loan saves.
Open the home loan EMI calculatorSources
- Tax rules for salaried individuals, AY 2026-27, Income Tax Department
- No foreclosure charges or prepayment penalties on floating-rate term loans to individuals (7 May 2014), Reserve Bank of India
This guide explains the rules in general. For your own situation, .