1How much tax can I save on a home loan?
Up to Rs 2,00,000 a year on interest under Section 24(b), plus principal within the Rs 1,50,000 80C limit. Both are old-regime deductions and are claimed separately.
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ArticleA home loan is one of the largest tax breaks most people will ever claim — but only if you understand the two separate deductions it creates and the conditions on each. Here's how to use it fully. (Old regime.)
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-13
Quick answer
How a home loan cuts your tax — Rs 2,00,000 interest under Section 24(b), principal under 80C, joint-loan benefits, and the under-construction rules people get wrong.
Interest on a home loan for a self-occupied house is deductible up to Rs 2,00,000 a year under Section 24(b) — the bigger of the two home-loan benefits. This is separate from any principal deduction, so don't confuse the two. The interest portion of your EMI, shown in your lender's certificate, is what counts.
The principal portion of your EMI qualifies under 80C, within the overall Rs 1,50,000 limit — alongside EPF, PPF, ELSS and the rest. Because 80C is usually crowded, the principal often only partly fits; that's fine, but know it competes with your other 80C claims.
If you and a co-owner are both borrowers and both contribute to repayment, each can separately claim interest (up to Rs 2,00,000 each) and principal within their own 80C limit. For a couple buying together, a properly structured joint loan can roughly double the household deduction — provided ownership and repayment are genuinely shared.
Interest paid before the house is ready ("pre-construction interest") isn't lost — it's claimed in five equal instalments starting from the year construction completes, within the overall limit. Many buyers forget this and never claim the interest paid during construction.
For a let-out property the interest deduction isn't capped the same way, but the overall house-property loss you can set off against other income is limited to Rs 2,00,000 a year, with the rest carried forward. The right treatment depends on whether the home is self-occupied or rented, so classify it correctly.
Up to Rs 2,00,000 a year on interest under Section 24(b), plus principal within the Rs 1,50,000 80C limit. Both are old-regime deductions and are claimed separately.
Yes, on a genuine joint loan. If you're both co-owners and co-borrowers contributing to repayment, each claims interest up to Rs 2,00,000 and principal within their own 80C limit.
Yes — in five equal instalments from the year construction completes. Pre-construction interest is claimed over five years, within the overall limit, rather than being lost.
Buying or co-owning a home? Write to the firm and we'll structure the loan and claims to maximise the benefit.