This article is part of the Home Loan Tax Benefits in India complete guide. For principal repayment, read Home Loan Principal Repayment Under Section 80C.
A home-loan EMI has two parts:
- principal repayment;
- interest charged by the lender.
Section 24(b) deals with the interest part of a loan used to buy, construct, repair, renew or reconstruct a house property. It does not cover principal repayment.
For an eligible self-occupied house under the old tax regime, the deduction can be as high as ₹2 lakh per year. For repairs or certain delayed-construction cases, the limit may be ₹30,000. For a let-out property, interest enters the house-property calculation differently, but set-off rules still matter.
Use the Home Loan Tax Benefit Calculator for an estimate, and confirm the final number using your lender’s interest certificate.
Tax-year note: this article focuses on FY 2025–26 / AY 2026–27 rules. The Income-tax Act, 2025 applies from 1 April 2026 for later tax years, so section numbering and return forms should be rechecked each year.
What Section 24(b) covers
Section 24(b) allows deduction for interest payable on borrowed capital used for:
- purchase of a house;
- construction of a house;
- repair;
- renewal;
- reconstruction.
It is claimed while calculating income under the head “Income from house property”.
It covers interest, not the full EMI
Suppose annual EMIs total ₹6,00,000:
| EMI component | Amount |
|---|---|
| Principal repaid | ₹1,40,000 |
| Interest charged | ₹4,60,000 |
| Total EMI paid | ₹6,00,000 |
Only the eligible interest component is considered under Section 24(b), subject to limits and conditions. The principal component may separately be considered under Section 80C if you use the old tax regime and satisfy the conditions.
Use the Home Loan EMI Calculator to understand the estimated principal-interest split.
Section 24(b) for a self-occupied property
A self-occupied property is generally a house used for your own residence and not rented out during the year.
Under the old tax regime, the self-occupied Section 24(b) limit is usually:
| Loan situation | Maximum deduction |
|---|---|
| Loan taken on or after 1 April 1999 for purchase or construction, with completion condition met | ₹2,00,000 |
| Loan for repair, renewal or reconstruction | ₹30,000 |
| Loan taken before 1 April 1999 | ₹30,000 |
| Purchase or construction not completed within the prescribed period | ₹30,000 |
The ₹2 lakh limit usually requires:
- loan taken on or after 1 April 1999;
- loan used for purchase or construction;
- purchase or construction completed within five years from the end of the financial year in which the money was borrowed;
- interest certificate from the lender or person to whom interest is payable.
The deduction is the lower of actual eligible interest and the applicable limit.
Example: interest lower than ₹2 lakh
Assume:
- self-occupied property;
- old tax regime;
- eligible annual interest: ₹1,65,000;
- construction completed within time.
Section 24(b) deduction:
Lower of ₹1,65,000 and ₹2,00,000 = ₹1,65,000
The unused ₹35,000 limit does not become a future deduction.
Example: interest higher than ₹2 lakh
Assume:
- self-occupied property;
- old tax regime;
- current-year eligible interest: ₹2,40,000;
- eligible pre-construction instalment: ₹60,000;
- total interest before cap: ₹3,00,000.
Section 24(b) deduction:
Lower of ₹3,00,000 and ₹2,00,000 = ₹2,00,000
The remaining ₹1 lakh is not carried forward merely because the annual self-occupied limit was exhausted.
Also, a ₹2 lakh deduction is not a ₹2 lakh refund. It reduces taxable income. At a 30% slab, a ₹2 lakh deduction saves roughly ₹60,000 before cess and surcharge effects.
Two self-occupied properties do not mean two ₹2 lakh limits
A taxpayer can potentially treat up to two eligible properties as self-occupied, but the interest cap is an aggregate taxpayer-level limit.
Example:
- interest on self-occupied Property A: ₹1,40,000;
- interest on self-occupied Property B: ₹1,10,000;
- total interest: ₹2,50,000.
Maximum self-occupied deduction under the old regime:
₹2,00,000 in aggregate, subject to conditions.
Construction completion rule
The five-year construction rule is one of the most important Section 24(b) conditions.
To receive the higher ₹2 lakh limit for a self-occupied house, construction should be completed within five years from the end of the financial year in which the loan was taken.
Example:
- loan taken: 15 November 2019;
- financial year: FY 2019–20;
- financial year ends: 31 March 2020;
- five-year deadline: 31 March 2025.
Completion on 10 February 2025 is within time. Completion on 5 April 2025 is outside the five-year window.
If completion is late, the self-occupied interest limit may fall from ₹2 lakh to ₹30,000.
For under-construction homes, read Home Loan Tax Benefits for Under-Construction Property and Pre-EMI.
Pre-construction interest
Interest may accumulate before a property is completed, especially in under-construction projects with staged disbursement.
Eligible pre-construction interest is generally not claimed fully in one year. It is divided into five equal annual instalments, beginning with the financial year in which construction is completed or the property is acquired.
Example:
- construction completed in FY 2025–26;
- eligible pre-construction interest: ₹4,50,000;
- annual instalment: ₹4,50,000 ÷ 5 = ₹90,000.
For FY 2025–26, your Section 24(b) interest considered before limits may include:
- current-year interest;
- first pre-construction instalment.
For a self-occupied property, both are combined before applying the ₹2 lakh or ₹30,000 limit. The pre-construction instalment does not get a separate limit.
Use the Pre-EMI Home Loan Calculator to estimate interest during staged disbursement.
Section 24(b) for a let-out property
For a let-out or deemed-let-out property, actual eligible interest may be deducted while calculating house-property income. The same ₹2 lakh self-occupied ceiling does not apply in the same way.
But “actual interest allowed in property calculation” is not the same as “unlimited tax benefit”.
A simplified let-out calculation looks like this:
| Particulars | Amount |
|---|---|
| Gross annual value / rent | ₹6,00,000 |
| Less: municipal taxes | ₹30,000 |
| Net annual value | ₹5,70,000 |
| Less: 30% standard deduction | ₹1,71,000 |
| Less: eligible interest | ₹4,80,000 |
| House-property loss | ₹81,000 |
Under the old regime, house-property loss may generally be set off against other income up to the applicable limit. Under the new regime, set-off and carry-forward treatment is more restrictive.
For second homes and rental situations, read Second Home Loan Tax Benefits.
Old tax regime vs new tax regime
The tax regime can change whether Section 24(b) helps you at all.
| Situation | Old tax regime | New tax regime |
|---|---|---|
| Self-occupied purchase/construction loan | Available up to applicable limit | Generally not available |
| Self-occupied repair loan | Available up to applicable limit | Generally not available |
| Let-out property interest | Considered in property computation | Considered in property computation, but loss set-off is restricted |
| House-property loss against salary or other income | Generally possible up to applicable limit | Generally not permitted |
| Joint self-occupied home | Each eligible co-owner may evaluate supported share | Self-occupied interest deduction generally unavailable |
A ₹2 lakh interest deduction does not automatically make the old regime better. Compare final tax payable, not just deduction amount.
Use the Home Loan Tax Benefit Old vs New Regime Calculator and read Home Loan Tax Benefits: Old vs New Tax Regime Compared.
Joint home loans
A joint home loan does not automatically double the deduction.
For two people to claim interest separately, each claimant should generally:
- be a legal co-owner;
- have a clear ownership share;
- be a borrower or co-borrower;
- contribute to repayment;
- have documentation for their share;
- use a tax regime where the deduction is available.
Can both joint owners claim ₹2 lakh each?
Potentially, yes, for an eligible self-occupied property under the old regime. But each person’s claim must be supported by their actual eligible interest share. They cannot both claim the same interest.
Example:
- self-occupied property;
- ownership: 50:50;
- both are co-borrowers;
- both pay equally;
- total annual interest: ₹4,60,000.
Each person’s interest share is ₹2,30,000. If all conditions are met, each may evaluate a deduction up to ₹2,00,000.
Read Co-Borrower vs Co-Owner: Who Can Claim Home Loan Tax Benefits? and use the Joint Home Loan Tax Benefit Calculator.
Balance transfer and Section 24(b)
Transferring a home loan to another lender does not automatically end the interest deduction, provided the new loan is used to repay the original housing loan and the documentation trail is clear.
Keep records showing:
Original property loan → balance transfer loan → repayment to old lender
Be careful if the new loan includes:
- personal-use top-up;
- extra cash paid to borrower;
- debt consolidation;
- non-housing renovation or consumption loan.
Read Can You Claim Home Loan Tax Benefits After a Balance Transfer? and use the Loan Balance Transfer Calculator.
Documents to keep
Keep these records:
- annual home-loan interest certificate;
- loan sanction letter;
- loan account statement;
- registered sale deed or ownership document;
- possession or completion certificate;
- builder-buyer agreement or allotment letter;
- bank statements showing EMI payments;
- balance-transfer records, if applicable;
- pre-construction interest calculation;
- return-working papers for joint or let-out claims.
For a fuller list, read Documents Required to Claim Home Loan Tax Benefits.
Common mistakes
Claiming the full EMI
Only eligible interest is considered under Section 24(b). Principal repayment follows separate rules.
Treating ₹2 lakh as automatic
₹2 lakh is a maximum limit, not a standard deduction for every borrower.
Ignoring the completion deadline
A delayed self-occupied property can reduce the limit from ₹2 lakh to ₹30,000.
Claiming all pre-construction interest in one year
Pre-construction interest is generally spread over five instalments.
Treating pre-construction instalment as an extra limit
For a self-occupied property, current-year interest and pre-construction instalment are combined before applying the overall cap.
Claiming self-occupied interest under the new regime
For FY 2025–26 / AY 2026–27, self-occupied home-loan interest is generally an old-regime benefit.
Both joint borrowers claiming full interest
The same interest cannot be claimed twice.
FAQs
Is Section 24(b) available only for bank loans?
Section 24(b) is based on eligible borrowed capital. But you must be able to prove the borrowing, purpose, interest amount, lender identity and repayment records. Bank or housing-finance-company loans are usually easier to document.
Can I claim Section 24(b) before possession?
Usually not as a regular self-occupied deduction. Eligible pre-construction interest is accumulated and claimed in five instalments from the completion or acquisition year.
Is pre-EMI the same as pre-construction interest?
Not exactly. Pre-EMI is a lending term for interest charged during construction on disbursed amounts. Pre-construction interest is a tax calculation for the prescribed pre-completion period. They can overlap, but they are not identical.
Can a co-borrower who is not a co-owner claim Section 24(b)?
They should not assume eligibility. Income from house property and the related deduction are linked to ownership. Being on the loan or paying EMI may not be enough without ownership rights.
Is the ₹2 lakh limit per loan?
No. For self-occupied property, it is not a separate limit for each loan account or lender.
Does home-loan prepayment increase my deduction?
No. Prepayment usually reduces future interest and may reduce future Section 24(b) deductions. Paying extra interest just to keep a deduction usually makes you worse off.
Use the Loan Prepayment vs Investment Calculator to compare prepayment with investing after considering tax benefit.
Final takeaway
Section 24(b) can be valuable, but the headline ₹2 lakh figure applies only in a specific situation: a qualifying self-occupied property under the old tax regime, with the purchase or construction conditions satisfied.
Remember:
- self-occupied purchase or construction loan: up to ₹2 lakh under the old regime, subject to conditions;
- repairs or delayed completion: ₹30,000 may apply;
- let-out property: actual eligible interest enters the property calculation, but loss set-off rules matter;
- pre-construction interest: generally claimed in five instalments;
- new regime: self-occupied interest deduction is generally unavailable;
- joint owners: claim only the supported ownership and repayment share.
Useful tools:
- Home Loan EMI Calculator
- Home Loan Tax Benefit Calculator
- Old vs New Tax Regime Calculator
- Joint Home Loan Tax Benefit Calculator
- Pre-EMI Home Loan Calculator
- Loan Balance Transfer Calculator
Official references
- Income Tax Department: Section 24
- Income Tax Department: self-occupied house property guidance
- Income Tax Department: threshold limits under the Income-tax Act
- Income Tax Department: old vs new tax regime FAQ
- Income Tax Department: ITR-1 filing guidance