Home Loan Tax Benefits FY 2026-27: Full Guide
Key takeaways
- Old regime: up to ₹2 lakh interest deduction (Section 24b) + ₹1.5 lakh principal (Section 80C) per year on a self-occupied home.
- New regime (the default): these deductions are generally NOT available for self-occupied homes — a fact many buyers still miss.
- Joint home loans can double the household's deductions — up to ₹7 lakh combined under the old regime.
- Budget 2026-27 left these limits unchanged, so this guide holds for the full financial year.
The single biggest misunderstanding in 2026
Most home-buying advice on tax was written for the old regime era, and much of it is now misleading. Since the new tax regime became the default, the classic "your home loan saves you tax" pitch only applies if you deliberately opt for the old regime — and for many salaried people, the new regime's lower slab rates beat the old regime's deductions anyway. So before you count tax savings in your home-buying math, work out which regime you'll actually file under.
Old regime: what you can claim
| Section | What it covers | Annual limit |
|---|---|---|
| 24(b) | Home loan interest — self-occupied home | ₹2,00,000 |
| 80C | Principal repayment + stamp duty & registration (in purchase year) | ₹1,50,000 (shared with other 80C items) |
| 80EE / 80EEA | Extra first-time-buyer interest deduction (loan sanction windows apply) | ₹50,000 / ₹1,50,000 |
Two practical notes people miss:
- The 80C bucket is shared. If your PF, ELSS and insurance already fill ₹1.5 lakh, your home loan principal adds nothing extra.
- Stamp duty counts — once. The year you buy, stamp duty and registration charges can be claimed under 80C. On a ₹1 crore home in Haryana that's ₹5-7 lakh paid, but only ₹1.5 lakh (minus your other 80C use) is claimable, and only that year.
New regime: what changes
Under the new regime, deductions for home loan interest and principal on a self-occupied house are generally not available. The main exception: a let-out (rented) property — interest can still be set off against that property's rental income. This creates a real planning fork:
- Living in the house yourself? The new regime gives your loan no tax help. Compare regimes on total tax, not habit.
- Renting the house out? Interest set-off against rent survives in the new regime, which keeps investor math workable.
The joint loan multiplier
Under the old regime, if you and your spouse are both co-owners and co-borrowers, each can claim deductions separately — up to ₹2 lakh interest and ₹1.5 lakh principal each. A dual-income household can therefore shelter up to ₹7 lakh a year. Both conditions matter: a co-borrower who isn't on the title deed gets nothing, and vice versa. Get the ownership structure right at registration; it can't be casually fixed later.
A worked example
Couple buys a ₹1.2 crore flat, ₹95 lakh joint loan at 8.5% for 20 years. Year-one interest ≈ ₹8 lakh, principal ≈ ₹1.9 lakh.
| Scenario | Deductions claimed | Approx. tax saved (30% slab) |
|---|---|---|
| Old regime, single borrower | ₹2L interest + ₹1.5L principal (if 80C free) | ~₹1.05 lakh/yr |
| Old regime, joint borrowers | ₹4L interest + up to ₹3L principal | ~₹2.1 lakh/yr |
| New regime, self-occupied | Nil on the loan | ₹0 from the loan (but lower slab rates overall) |
Whether old-regime-with-deductions beats new-regime-lower-rates depends on your full income picture — run both, or have a CA run them, before you file. Don't decide based on this table alone.
FAQs
Can I claim home loan benefits in the new tax regime?
Not for a self-occupied home. For a let-out property, interest can still be set off against rental income.
Can both spouses claim deductions on one loan?
Yes, under the old regime — provided both are co-owners AND co-borrowers. Each gets their own ₹2L + ₹1.5L limits.
Do stamp duty and registration qualify for deduction?
Yes, under 80C in the year of purchase only, within the shared ₹1.5 lakh limit. See our stamp duty guide for what you'll actually pay.
What about under-construction property interest?
Pre-construction interest is claimable in five equal instalments starting the year construction completes — within the same ₹2 lakh annual cap for self-occupied homes (old regime).
Did Budget 2026-27 change any of this?
No structural changes — the limits under 24(b), 80C and 80EEA carried forward unchanged.
Which regime should I pick?
If your total deductions (home loan + 80C + insurance + HRA etc.) exceed roughly ₹3.75-4 lakh, the old regime often wins; below that, the new regime's lower rates usually do. Verify with your actual numbers.
Planning a purchase this year? Factor the regime question into your budget before you commit to an EMI — and if you're comparing projects, our new launch listings and full project directory show current pricing to run your math against.
