FY 2026-27

The Home Buyer's Tax Playbook

A home loan on a house you live in can take up to ₹3.5 lakh a person off your taxable income: ₹2 lakh of interest under Section 24(b), and principal inside the ₹1.5 lakh Section 80C limit. That is old regime only. Below is how each piece works for FY 2026-27 (1 April 2026 to 31 March 2027), and when it is still not enough to beat the new regime. The full rules are in the house property guide.

Official sources

Threshold limits (page labelled AY 2026-27, not FY 2026-27). Section 24(b) on a self-occupied house: up to ₹2,00,000 for a purchase or construction loan, ₹30,000 for repair, renewal, or reconstruction. Section 80C: up to ₹1,50,000. Section 80EE: ₹50,000 on loans sanctioned in FY 2016-17. Section 80EEA: ₹1,50,000 on loans sanctioned 1 April 2019 to 31 March 2022.
Section 115BAC, the new regime, which is the default
Employee benefits (page labelled AY 2026-27), including the standard deduction of ₹50,000 (old regime) and ₹75,000 (new regime)
Income-tax Act, 2025 (CBDT hub), for the Act text that applies when you file. Section numbers on this page are the familiar 1961 Act ones.

The 24(b) Interest Deduction

Section 24(b) lets you deduct the interest part of your EMI. On a house you live in, the cap is ₹2,00,000 a year, and only in the old regime. On a house you rent out, there is no cap on the interest itself. The detail is on the Section 24(b) guide.

Scenario	Old Regime Limit	New Regime Limit	Condition
Self-occupied, bought or built	₹2,00,000	₹0	Construction completed within 5 years from the end of the FY you borrowed in
Let-out	No upper limit	No upper limit	Old regime: a house-property loss can reduce other income by up to ₹2,00,000 a year. New regime: the loss stays inside house property.
Construction late (>5 yrs), or a repair loan	₹30,000	₹0	The cap falls from ₹2L to ₹30K

Say you borrow ₹50L at 8.5%. Interest in the first year is about ₹4.2L. You can deduct ₹2L of it. If you are in the 30% slab, that saves ₹62,400 in tax, including 4% cess.

WATCH THE 5-YEAR DATE

Construction has to be finished within 5 years from the end of the financial year you took the loan. Borrowed in FY 2022-23? The house needs to be complete by 31 March 2028. Miss that and the cap drops from ₹2L to ₹30,000, so ₹1.7L a year of deduction is gone. If your builder is running late, this is the date to hold them to.

The 80C Principal Deduction

The principal part of your EMI counts under Section 80C. It is not an extra ₹1.5L. It sits in the same ₹1,50,000 limit as EPF, PPF, ELSS, life insurance premiums, tuition fees, and NSC. If EPF already uses most of that limit, the principal adds little.

What Qualifies Under 80C	When It Counts
Principal repayment (EMI component)	In the year you actually repay it
Stamp duty and registration charges	In the year you pay them, not the year you get possession. Often missed.
Other 80C items (PPF, EPF, ELSS…)	Same ₹1.5L limit. No separate cap.

Stamp duty: many buyers don't know it counts. Rates vary by state. At 5%, a ₹50L flat means ₹2.5L of stamp duty. Only ₹1.5L of that can go under 80C, and only if nothing else has used the limit that year.

SELLING WITHIN 5 YEARS

Sell the house before 5 years from the end of the financial year you got possession, and the 80C you claimed on principal and stamp duty is reversed. It is added back to your income in the year you sell. The 24(b) interest you claimed is not reversed. Tax on the sale itself is on the real estate capital gains guide.

First-Time Buyer Bonus: 80EE + 80EEA

Two extra interest deductions exist for first-time buyers. Both are old regime only, and both depend on when the bank sanctioned your loan. A new loan in FY 2026-27 does not qualify for either.

add_home Section 80EE — First-Time Buyer

₹50,000

On top of the ₹2L 24(b) cap. The loan must have been sanctioned in FY 2016-17, for ₹35L or less, on a house worth ₹50L or less. You must not have owned another house on the date of sanction.

Sanctioned after 31 March 2017? 80EE is not for you.

add_home Section 80EEA — Affordable Housing

₹1,50,000

On top of the ₹2L 24(b) cap. The loan must have been sanctioned between 1 April 2019 and 31 March 2022, by a financial institution or housing finance company. The stamp duty value of the house must be ₹45L or less, and you must not have owned another house when the loan was sanctioned.

Together with 24(b), that is up to ₹3.5L of interest a year on one self-occupied house.

Comparison	80EE	80EEA
Extra deduction	₹50,000	₹1,50,000
Property value cap	₹50L	₹45L (stamp duty value)
Loan sanction window	FY 2016-17 only	1 Apr 2019 – 31 Mar 2022
Regime	Old only	Old only
Can claim together?	No. 80EEA is only for someone not eligible for 80EE, and the two sanction windows don't overlap.

If your loan was sanctioned after 31 March 2022, neither section applies. For a first-time buyer taking a loan now, the home-loan deductions are 24(b) and 80C.

Joint Loan: Double the Benefit

On a joint loan, each qualifying person has their own caps: up to ₹2L of interest under 24(b) and principal inside their own ₹1.5L 80C limit. A couple can deduct up to ₹4L of interest on one self-occupied house in the old regime. Each person claims only their own share.

Each person who claims has to meet all three conditions:

person_add

Co-Borrower

Named on the loan agreement with the bank.

home

Co-Owner

Named on the property title. Being on the loan alone is not enough.

account_balance

Own EMI Account

Their share of the EMI is paid from their own bank account.

If the whole EMI leaves one person's account, only that person can claim. Keep the bank's interest certificate and the EMI records for both of you.

WORKED EXAMPLE

₹60L joint loan at 8.5%, owned 50:50. First-year interest is about ₹5.1L and principal about ₹1.2L. Both spouses are co-borrowers and co-owners, and each pays half the EMI from their own account. Each has about ₹2.55L of interest, so each claims the ₹2L cap. Each repaid ₹60,000 of principal, so each claims ₹60,000 under 80C. That is ₹2.6L each, ₹5.2L for the couple. If both are in the 30% slab, they save about ₹1,62,240 a year between them, including cess.

Pre-Construction Interest

If you started paying interest before the house was ready, that interest is pre-construction interest. You can claim it, but not in the year you paid it, and many people never claim it at all.

Add up the interest from the date you borrowed to 31 March before the year construction is completed. Claim it in 5 equal parts, starting in the year construction is completed. Example: loan in FY 2023-24, house completed in FY 2026-27. Interest for FY 2023-24 to FY 2025-26 is claimed one-fifth a year from FY 2026-27 to FY 2030-31.

Scenario	Pre-Construction Interest	Annual Deduction
Self-Occupied Property	₹5L paid over 3 years before completion	₹1,00,000/year for 5 years, inside the ₹2L cap
Let-Out Property	₹5L paid over 3 years before completion	₹1,00,000/year for 5 years (no cap)

The catch: on a self-occupied house, the pre-construction share is inside the same ₹2L cap. If this year's interest already reaches ₹2L, the extra ₹1L adds nothing. It helps only when regular interest is below ₹2L, or when the house is let out.

IF YOU RENT IT OUT

On a let-out house, the full interest is deductible, pre-construction share included. You pay tax on the rent, less 30% under Section 24(a). If interest is bigger than the rent, the loss can reduce your other income by only ₹2L a year in the old regime. The rest carries forward for up to 8 years, against house property only. In the new regime the loss stays inside house property. Run both cases on the home loan tax calculator before you decide.

The New Regime Trap

The new regime is the default. If you stay in it, a house you live in gets no home-loan deduction at all. No 24(b) interest, no 80C principal, no 80EE or 80EEA.

Benefit	Old Regime	New Regime
24(b) Interest — Self-Occupied	₹2,00,000	₹0
80C Principal Repayment	₹1,50,000 (within 80C limit)	₹0
80EE / 80EEA	₹50,000 / ₹1,50,000	₹0
24(b) Interest — Let-Out	No upper limit	No upper limit; loss stays in house property

Interest on a rented house is allowed in both regimes. That doesn't help if you live in the flat. The new regime has lower slab rates instead (nil up to ₹4L, 5% on ₹4–8L, 10% on ₹8–12L, and so on). A home loan does not automatically make the old regime cheaper. It depends on your income and your other deductions.

RUN THE NUMBERS BEFORE CHOOSING

Say your interest is ₹3L and principal ₹1.5L. Only ₹2L of the interest counts, so the home loan gives ₹3.5L of deductions. If all of that falls in the 30% slab, it is worth ₹1,09,200 in tax, including cess. Whether that beats the new regime depends on your salary. At ₹15L it doesn't (see the next section). Compare both on the regime comparator before you pick.

Renting vs Buying: Tax Math

Rent vs buy at ₹15L CTC in Bengaluru, on the tax rules above. To keep it simple, the whole ₹15L is treated as salary in both cases.

SCENARIO A: RENT + NEW REGIME

CTC₹15,00,000
RegimeNew
Deductions claimed₹75,000 (standard deduction only)
Taxable income₹14,25,000
Tax before cess₹93,750
Tax + 4% cess₹97,500
Rent paid (₹25K/month)₹3,00,000/year

SCENARIO B: BUY + OLD REGIME

CTC₹15,00,000
RegimeOld
80C (EPF + principal)₹1,50,000
24(b) interest₹2,00,000
80D health insurance₹25,000
Standard deduction₹50,000
Taxable income₹10,75,000
Tax before cess₹1,35,000
Tax + 4% cess₹1,40,400

With ₹4.25L of deductions, the old regime still costs ₹42,900 more in tax than the new regime at this salary. The buyer would pay less by staying in the new regime and giving up the home-loan deductions: ₹97,500, the same as the renter.

To match ₹97,500 in the old regime, taxable income would have to come down to about ₹9,06,250. That means roughly ₹5.94L of deductions in total, ₹1.69L more than this example. A spouse who is a co-borrower claims on their own return, so it does not change this person's numbers.

TAX IS NOT THE REASON TO BUY

At ₹15L, the deductions don't pay for the home loan. Buy or rent on the non-tax side: the price, the EMI, how long you'll stay, and the fact that rent builds no asset while principal repaid does. Then use the regime comparator each year to pick the cheaper regime. The salaried guide has a fuller ₹15L Bengaluru example.

Run Your Numbers

Use our home loan tax calculator to work out Section 24(b) interest and 80C principal.

Home Loan Tax Calculator →