Home Loan Tax Benefits Under the Income-tax Act, 2025: What Changed, and What Didn't

Sections 24(b) and 80C have new numbers from 1 April 2026. Interest up to Rs 2 lakh on a self-occupied home, let-out interest, principal and which regime allows what.

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Since 1 April 2026, the Income-tax Act, 2025 has replaced the 1961 Act. If you have a home loan, the section numbers you remember, 24(b) and 80C, have changed. The good news: the benefits themselves are broadly the same.

What replaced Section 24(b) and Section 80C?

According to TheTaxCorp (May 2026):

Benefit	Old section	New section
Interest on a self-occupied home	24(b)	22(1)(b) and 22(1)(c)
Interest on a let-out home	24(b)	21
Principal repayment	80C	123

How much home loan interest can I deduct on a self-occupied flat?

Up to Rs 2,00,000 a year, if the home was bought or built with borrowed money, completed within five years of the year of borrowing, and the lender certifies the interest. Otherwise the limit is Rs 30,000.

What about a flat I've let out?

Interest on a let-out property is deductible against the rent. TheTaxCorp describes it as actual interest with no ceiling under the new section. There are separate rules on how much loss from house property can be set off against your other income, so ask your CA how it applies to you.

Can I claim the principal repayment?

Yes, under the new Section 123, within the overall limit of Rs 1,50,000 shared with other eligible investments.

What about interest paid before possession?

Interest paid during construction is deductible in five equal yearly instalments, starting from the year construction is completed.

The section numbers changed. The habit that saves tax didn't: keep your interest certificate and file on time.

Old regime or new regime: which benefits can I use?

Let-out property interest: available under both regimes.
Self-occupied interest and principal repayment: only under the old regime.

If you live in your flat and have a large loan, compare both regimes each year with your CA.

What this means for you

Home buyers: work out the post-tax EMI, not just the EMI, before choosing a loan size. Use our EMI calculator and see October 2026 rates.
Landlords: interest on a let-out flat is one of the few real deductions against rent, beyond the standard 30%. Keep the lender's certificate every year.
NRI owners: the let-out interest deduction helps when you file your Indian return. See NRI rental income and refunds.

Reports screen in the TND app showing monthly income, expenses and TDS deducted for the year — Owners we manage download yearly income and TDS reports from the TND app.

Frequently asked questions

What replaced Section 24(b) in the new Income-tax Act?

Interest on a self-occupied home is now under Sections 22(1)(b) and 22(1)(c), and interest on a let-out home under Section 21.

What is the home loan interest limit for a self-occupied flat?

Rs 2,00,000 a year, subject to conditions; otherwise Rs 30,000.

Can I claim home loan benefits under the new tax regime?

Interest on a let-out property, yes. Self-occupied interest and principal repayment, only under the old regime.

Related reading

Planning a purchase with a loan? Book a video call or WhatsApp me.

Warmly,
Yanik

General information, not tax advice. Please confirm with your chartered accountant.

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