House Property & Home Loan Tax Guide

A house you live in, a house you rent out, and a third house you leave empty are not taxed the same way. This page is the FY 2026-27 treatment of Section 24(b) interest, principal under Section 80C, Sections 80EE and 80EEA, and what the new regime still allows. The Act text is on the Income-tax Act, 2025 hub. A CBDT page labelled AY 2026-27 is not the same year as FY 2026-27.

Official sources

Income-tax Act, 2025 (CBDT hub)
Section 115BAC, the new regime
Threshold limits (page labelled AY 2026-27, not FY 2026-27), including the Section 80C cap
Employee benefits (page labelled AY 2026-27, not FY 2026-27), including the standard deduction of ₹50,000 and ₹75,000

Self-occupied house

A self-occupied house is one you or your family live in. No rent is counted. Under the old regime you can still deduct home-loan interest, up to the cap below.

GROSS ANNUAL VALUE

NIL

No rental income is computed. Gross annual value is zero for a self-occupied house.

24(b) INTEREST CAP

₹2,00,000

Maximum deduction on home loan interest per year. Old regime only.

Loss set-off: If the Section 24(b) interest is more than your other house-property income, the difference is a loss. Under the old regime that loss can be set off against other heads of income, up to ₹2,00,000 a year. Loss above ₹2,00,000 is carried forward for up to 8 assessment years. The new regime does not allow this set-off against salary or other heads. That limit is in the let-out section.

WHICH HOUSE COUNTS

A house is self-occupied if you live in it, your spouse, children, or parents live in it, or it is vacant, and you own no more than 2 residential properties. If you own more than 2, the extra houses are deemed let-out.

House you rent out

If you rent the house out, gross annual value is the higher of:

Municipal value
Fair rental value
Actual rent received (capped at standard rent, if that applies)

SECTION 24(a)

30%

Standard deduction from gross annual value. No bills needed.

SECTION 24(b)

No cap

Full interest is deductible. The ₹2,00,000 limit does not apply.

NEW REGIME

Allowed

A loss can be used only against other house property.

NEW REGIME: RENTED HOUSE

Under the new regime, Section 24(b) interest on a let-out house is allowed. If that interest leaves a loss under house property, you can set the loss off only against income from other houses. It cannot reduce salary, business income, or capital gains.

Deemed let-out: more than two houses

If you own more than 2 residential properties, every house after the second is deemed let-out. The tax department treats it as rented even when it is empty, or even when you live in it.

A deemed let-out house is taxed on expected rent: the higher of municipal value and fair rental value. Actual rent received does not matter for these houses.

Property	Status	24(a) 30%	24(b) Interest
1st property	Self-occupied or let-out	check	₹2L cap (self-occupied) or no cap (let-out)
2nd property	Self-occupied or let-out	check	₹2L cap (self-occupied) or no cap (let-out)
3rd+ property	Deemed let-out	check	No cap, both regimes

Interest before the house is ready

Interest you pay before construction is completed, or before you acquire the house, is added up and deducted in 5 equal annual instalments. The first year is the financial year in which construction is completed.

This pre-construction interest uses the same caps as regular Section 24(b) interest:

Property Type	Pre-Construction Deduction	Regime
Self-occupied	Within the ₹2,00,000 cap (combined with regular 24(b))	OLD ONLY
Let-out	No cap (combined with regular 24(b))	BOTH

FIVE-YEAR SPLIT

Loan taken in FY 2023-24, construction completed in FY 2026-27. Interest paid from FY 2023-24 to FY 2025-26 is pre-construction interest. Claim one-fifth of it each year from FY 2026-27 to FY 2030-31, on top of the regular Section 24(b) deduction for that year.

Joint home loan

When two or more people take the loan together, each co-owner claims their own deduction. The caps are not shared. Two qualifying people can claim two caps. Three can claim three.

Each co-owner can claim:

Section 24(b)

Up to ₹2,00,000 interest per person (self-occupied, old regime) or no cap (let-out)

Section 80C

Principal repayment, inside that person's ₹1,50,000 basket

Each person who claims has to meet all three conditions:

check_circle Co-owner of the property

check_circle Co-borrower on the loan

check_circle EMI paid from their own bank account

warning NAME ON THE LOAN AND THE TITLE

If only the primary borrower claims the deduction, a spouse who is a co-owner but not a co-borrower gets nothing. Both names have to be on the loan and on the property title.

Section 80C: home loan principal

OLD REGIME ONLY

Principal repaid on the home loan is deductible under Section 80C. It shares the ₹1,50,000 limit with the other items in that section:

80C Instrument	Cap	Old Regime	New Regime
Home loan principal	Within ₹1,50,000	check	close
Stamp duty and registration	Within ₹1,50,000	check	close
PPF	Within ₹1,50,000	check	close
ELSS	Within ₹1,50,000	check	close

Stamp duty and registration charges also qualify under Section 80C, but only in the year you pay them, not in the year you get possession.

Section 80EE: first-time buyer

OLD REGIME ONLY

Section 80EE is an extra ₹50,000 deduction for home-loan interest, on top of the ₹2,00,000 cap under Section 24(b). It is for first-time buyers.

Criterion	Requirement
Loan sanctioned	FY 2016-17 only
Loan amount	₹35,00,000 or less
Property value	₹50,00,000 or less
First-time buyer	No other house property owned on the date of sanction
Deduction	₹50,000
On top of	Section 24(b) ₹2,00,000 cap

ONLY FY 2016-17 LOANS

Section 80EE applies only if the loan was sanctioned in FY 2016-17. A loan sanctioned after that year does not qualify. Check Section 80EEA instead.

Section 80EEA: affordable housing

OLD REGIME ONLY

Section 80EEA is an extra ₹1,50,000 deduction for home-loan interest, on top of the ₹2,00,000 cap under Section 24(b). It is for affordable housing.

Criterion	Requirement
Property value	₹45,00,000 or less (stamp duty value)
Loan from	Approved financial institution or housing finance company
Loan sanctioned	Between 1 Apr 2019 and 31 Mar 2022
First-time buyer	No other house property owned at the time of sanction
Deduction	₹1,50,000
On top of	Section 24(b) ₹2,00,000 cap

SELF-OCCUPIED, OLD REGIME

Section 24(b) ₹2,00,000 + Section 80EEA ₹1,50,000 = ₹3,50,000 of interest deduction in a year. Principal under Section 80C is separate, up to ₹1,50,000.

What the new regime still allows

warning NOT IN THE NEW REGIME

These deductions are not available under the new regime:

Section 24(b) interest on a self-occupied house (₹2,00,000 cap)
Section 80C principal repayment (₹1,50,000 basket)
Section 80EE, first-time buyer (₹50,000)
Section 80EEA, affordable housing (₹1,50,000)

What is still allowed in the new regime:

Deduction	Old Regime	New Regime
24(b) self-occupied	₹2,00,000	Not allowed
24(b) let-out	No cap	Allowed (loss stays inside house property)
80C principal	₹1,50,000	Not allowed
80EE	₹50,000	Not allowed
80EEA	₹1,50,000	Not allowed

COMPARE BOTH REGIMES

If you have a home loan, run the numbers under both regimes. The new regime's standard deduction is ₹75,000, against ₹50,000 in the old regime. That difference may or may not cover the loss of Section 24(b), Section 80C, Section 80EE, and Section 80EEA. Use the Home Loan Tax Calculator to compare.

Worked example: joint loan of ₹40,00,000 in Bengaluru

calculate SCENARIO

Both spouses are co-owners and co-borrowers. Loan: ₹40,00,000. The house is self-occupied in Bengaluru. Each spouse pays the EMI from their own bank account. The table uses each person's Section 24(b) cap and Section 80C cap in the old regime.

Deduction	Per person	Both together
24(b) interest (self-occupied, old regime)	₹2,00,000	₹4,00,000
80C principal	₹1,50,000	₹3,00,000
Total	₹3,50,000	₹7,00,000

OLD REGIME

Total deduction₹7,00,000

Tax saved (30% slab)₹2,10,000

NEW REGIME

24(b) self-occupied₹0

80C₹0

Total deduction₹0

₹7,00,000 at 30% is ₹2,10,000. In the new regime the same self-occupied loan gives no Section 24(b) deduction and no Section 80C deduction, so the home-loan deduction in this example is ₹0.

Self-occupied house

House you rent out

Deemed let-out: more than two houses

Interest before the house is ready

Joint home loan

Section 80C: home loan principal

Section 80EE: first-time buyer

Section 80EEA: affordable housing

What the new regime still allows

Worked example: joint loan of ₹40,00,000 in Bengaluru

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