Home Loan Tax Benefits in 2026: A Complete Guide for Indian Borrowers

Why home loan tax benefits matter

A home loan is usually the largest borrowing an Indian household takes on, and the income tax code offers meaningful relief on both the interest and the principal you repay.

Interest deduction under Section 24(b)

For a self-occupied property, interest paid on a housing loan is deductible up to Rs 2,00,000 a year under the old tax regime. For a let-out property the interest is fully deductible against rental income, subject to the overall house property loss cap of Rs 2,00,000 that can be set off against other income in a year.

Principal repayment under Section 80C

The principal component of your EMI qualifies within the overall Rs 1,50,000 Section 80C limit, alongside EPF, PPF, ELSS and life insurance premiums. Stamp duty and registration charges paid in the year of purchase also qualify.

Old regime vs new regime

Most home loan deductions are available only under the old regime. Compare your total deductions against the lower slab rates of the new regime before you choose, especially in the early years of a loan when the interest component is highest.

Key takeaways

• Interest relief is capped at Rs 2 lakh a year for a self-occupied home.
• Principal repayment shares the Rs 1.5 lakh Section 80C pool.
• Joint borrowers who are also co-owners can each claim the limits separately.
• Verify your eligibility with a tax adviser before filing.