TAX DEDUCTION SECTION 24(b)

Home loan interest under Section 24(b)

Section 24(b) is the deduction for interest you pay on a loan for a house. The amount depends on whether you live there or rent it out, and on the regime you use. The threshold table is labelled AY 2026-27. This page is about FY 2026-27, which is AY 2027-28, so check that the table still matches the year you file.

Official sources

Threshold limits (page labelled AY 2026-27, not FY 2026-27). Section 24(a) is 30% of annual value. Section 24(b) for a self-occupied house is up to ₹2,00,000 when the loan is for construction or acquisition, and up to ₹30,000 when it is for reconstruction, repair, or renewal. From AY 2020-21 the deduction can cover two self-occupied houses. The total stays ₹2,00,000 or ₹30,000. It does not double.
Income-tax Act, 2025 (CBDT hub)
Section 115BAC, the new regime

What you can deduct

The deduction is the interest on a loan taken to:

check_circle Buy a house

check_circle Build a house

check_circle Repair or renew a house

check_circle Rebuild a house

Section 24(a) is a different deduction. It is 30% of the net annual value of a let-out house. You do not need bills for it. Section 24(b) is the interest you actually pay, and the bank papers have to support it. You can claim both on the same rented house.

24(a) AND 24(b)

24(a): 30% of annual value. No proof. Let-out houses. 24(b): interest paid. Loan papers required. The self-occupied cap depends on why you borrowed.

Self-occupied caps

A self-occupied house is one you live in, your family lives in, or you leave vacant, and you own no more than two residential properties. A third house is treated as rented. That rule is on the house property guide.

BUY OR BUILD

₹2,00,000

Acquisition or construction. Old regime only. Two self-occupied houses still share this one total.

REPAIR, RENEW, OR REBUILD

₹30,000

Reconstruction, repair, or renewal. Old regime only. Two houses still share this one total.

If the interest you pay is lower than the cap, you deduct the interest you pay. You do not fill the cap up to ₹2,00,000 or ₹30,000.

Loss set-off: Gross annual value of a self-occupied house is nil, so the interest is a loss under house property. In the old regime you can set that loss off against other income, up to ₹2,00,000 a year. Anything above that is carried forward for up to 8 assessment years. The new regime does not let this loss reduce salary.

TWO HOUSES, ONE CAP

The threshold table says that from AY 2020-21 the interest deduction can cover two self-occupied houses. The total does not become ₹4,00,000 for one person. It stays ₹2,00,000 for a purchase or construction loan, and ₹30,000 for a repair, renewal, or reconstruction loan.

A house you rent out

The ₹2,00,000 and ₹30,000 rows on the threshold table are for a self-occupied house. On a house you rent out, you deduct the interest you pay. There is no ₹2,00,000 cap on that interest.

INTEREST DEDUCTION

No cap

The full interest is deductible, including when it is more than ₹2,00,000.

SET-OFF AGAINST SALARY

₹2,00,000

Old regime only, and only up to this amount in a year. The new regime keeps a house-property loss inside house property.

Gross annual value is the higher of municipal value, fair rental value, and actual rent received (capped at standard rent, if that applies). Take off 30% under Section 24(a), then the full interest under Section 24(b). If interest is larger than what remains, the difference is a house-property loss.

Joint loans

Each co-owner deducts only their share of the interest, and only when all three of these are true:

check_circle Co-owner of the house

check_circle Co-borrower on the loan

check_circle EMI paid from their own account

Each person has their own cap. On a self-occupied house in the old regime, that is ₹2,00,000 for a purchase or construction loan, or ₹30,000 for repair, renewal, or reconstruction. A let-out house has no cap for each person who qualifies. A married couple who both qualify can therefore deduct ₹4,00,000 of purchase or construction interest on one self-occupied house in the old regime. On a repair loan the same couple is limited to ₹30,000 each.

warning ALL THREE MUST BE MET

A name on the title is not enough. If your spouse owns the house with you but is not on the loan, they cannot claim Section 24(b). If both of you are on the loan but the EMI leaves only one bank account, only that person can claim.

Interest before the house is ready

Interest paid before construction is finished, or before you acquire the house, is deducted in 5 equal annual instalments. The first year is the financial year in which construction is completed. It is added to that year's regular Section 24(b) interest, and the same cap still applies to the total.

ONE WORKED SPLIT

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

Property	Pre-construction plus this year's interest	Regime
Self-occupied, bought or built	Inside the ₹2,00,000 cap, combined	OLD ONLY
Self-occupied, repair or rebuild	Inside the ₹30,000 cap, combined	OLD ONLY
Let-out	No cap, combined with regular 24(b)	BOTH

Old regime and new regime

The new regime is the default under Section 115BAC. Self-occupied interest is useful only if you opt for the old regime. Compare both on the regime comparator before you file.

What	Old regime	New regime
Self-occupied, bought or built	Up to ₹2,00,000	Not allowed
Self-occupied, repair, renewal, or reconstruction	Up to ₹30,000	Not allowed
Let-out interest	No cap	Allowed. Loss stays inside house property
Loss set off against salary	Up to ₹2,00,000 a year	Not allowed
Loss carried forward	8 assessment years	8 assessment years, only against house property

warning SELF-OCCUPIED AND THE NEW REGIME

If you live in the house and you stay in the new regime, Section 24(b) interest does not reduce your tax. Interest on a rented house is still allowed. A loss from that house cannot reduce salary.

Mistakes that get the claim wrong

close Skipping the five instalments

If the loan started before the house was ready, that earlier interest is still claimable, one-fifth a year for five years, inside the same cap. It is not claimed automatically.

close Only the first name on the loan claims it

A spouse who is a co-owner, a co-borrower, and who pays their share of the EMI from their own account has their own cap. Filing only the first borrower drops the second claim.

close Using the ₹2,00,000 cap on a repair loan

On a self-occupied house, reconstruction, repair, and renewal stop at ₹30,000. The ₹2,00,000 row is for acquisition or construction. Putting a repair loan on the higher row does not match the threshold table.

close Expecting the new regime to allow a self-occupied claim

The new regime does not allow Section 24(b) on a self-occupied house. Let-out interest is allowed, and the loss stays inside house property.

close Claiming 24(b) or 80C without the loan papers

Keep the sanction letter, the bank's interest certificate, and proof of the EMI. Principal repayment is a separate claim under Section 80C, covered on the house property guide. The same papers support both. Without them, the deduction can be denied in assessment.

RUN YOUR OWN NUMBERS

The house property guide also covers Sections 80C, 80EE, and 80EEA. The home loan tax calculator uses ₹2,00,000 for a self-occupied house in the old regime, and no cap for a let-out house. It does not apply the ₹30,000 repair cap.