Section 24(b): How to Claim Home Loan Interest Deduction in AY 2026-27

If you're repaying a home loan, you're sitting on one of the most valuable tax deductions available under Indian income tax law. Section 24(b) of the Income Tax Act lets you deduct interest paid on a housing loan from your taxable income — up to Rs 2 lakh per year for a self-occupied property. Combined with the principal repayment deduction under Section 80C, home loans remain one of the most tax-efficient ways to build wealth in India.

Here's everything you need to know to claim this deduction correctly in your ITR for AY 2026-27.

What Is Section 24(b)?

Section 24(b) allows you to claim a deduction for the interest component of your home loan EMI. This deduction is claimed under the head "Income from House Property" and directly reduces your gross total income.

Unlike Section 80C (which covers principal repayment), Section 24(b) specifically targets the interest portion of your loan. Since home loan EMIs in the early years are heavily weighted toward interest, this deduction is especially significant for those in the first 10-15 years of their loan tenure.

Deduction Limits at a Glance

*For let-out and deemed let-out properties, the entire interest paid is deductible. However, the overall loss from house property that can be set off against other income (like salary) is capped at Rs 2 lakh per year under Section 71(3A). Any excess loss carries forward for up to 8 assessment years.

Eligibility Conditions

To claim the full Rs 2 lakh deduction under Section 24(b), you must meet these requirements:

1. The Loan Must Be for Purchase or Construction

The deduction applies when the loan is taken specifically for:

• Purchasing a ready-to-move-in property
• Constructing a new house
• Renovating, repairing, or reconstructing an existing property (limited to Rs 30,000)

A loan taken to buy a plot of land alone does not qualify — the construction must be completed on the land for the deduction to apply.

2. Construction Must Be Completed Within 5 Years

For under-construction properties, the construction or acquisition must be completed within 5 years from the end of the financial year in which the loan was taken. If this deadline is missed, the maximum deduction drops from Rs 2 lakh to Rs 30,000.

3. You Must Be an Owner or Co-owner

Only the person who is both an owner (or co-owner) of the property and a borrower (or co-borrower) on the loan can claim this deduction. If your spouse is the sole borrower but you're the sole owner, neither of you qualifies for the deduction on the other's basis.

4. Possession Must Be Obtained

For self-occupied properties, the deduction is available only from the year in which you take possession of the property. For the pre-construction period, see the section below.

Pre-Construction Interest: The Hidden Benefit

Many homebuyers overlook the pre-construction interest deduction. If you're paying EMIs while your property is still under construction, you cannot claim Section 24(b) deduction during those years. However, the total interest paid during the pre-construction period is not lost.

Once construction is complete and you receive possession, you can claim the accumulated pre-construction interest in five equal annual instalments, starting from the year of completion.

Example

Rajesh took a home loan in April 2022 for an under-construction flat. He paid a total of Rs 4,80,000 as interest before receiving possession in March 2025.

• Pre-construction interest: Rs 4,80,000
• Annual instalment: Rs 4,80,000 / 5 = Rs 96,000
• From FY 2024-25 onward, Rajesh can claim Rs 96,000 per year for 5 years as pre-construction interest, in addition to the regular interest he pays after possession

However, the combined total of regular interest and pre-construction interest instalment cannot exceed Rs 2 lakh in any year for a self-occupied property.

How Section 24(b) Works With Different Property Scenarios

Self-Occupied Property (1 or 2 Properties)

From AY 2020-21 onward, you can treat up to two properties as self-occupied. For both self-occupied properties combined, the maximum Section 24(b) deduction is Rs 2 lakh in total — not Rs 2 lakh each.

If you own two houses and both have home loans, you'll need to strategically decide which interest amounts to claim within the Rs 2 lakh overall cap.

Let-Out (Rented) Property

If your property is rented out, the calculation changes significantly:

1. Start with the Gross Annual Value (actual rent received or fair rent, whichever is higher)
2. Deduct 30% standard deduction under Section 24(a) for maintenance and repairs
3. Deduct the entire interest paid under Section 24(b) — there is no Rs 2 lakh cap here

This can often result in a loss from house property, especially in the early years when interest payments are high and rental yields are low.

Example: Let-Out Property Calculation

Priya owns a flat in Bangalore that she rents out for Rs 25,000/month. Her annual home loan interest is Rs 4,50,000.

Priya can set off Rs 2,00,000 of this loss against her salary income in the current year. The remaining Rs 40,000 carries forward to future years.

Section 24(b) Under Old Regime vs New Regime

This is where many taxpayers get tripped up. The treatment of Section 24(b) differs significantly between the two tax regimes:

If you have a self-occupied property with a significant home loan, this deduction alone could make the old tax regime more beneficial for you — especially at higher income levels.

Quick Break-Even Check

If your taxable income is above Rs 10 lakh and you're paying more than Rs 1.5 lakh in home loan interest annually, run the numbers for both regimes. The Rs 2 lakh Section 24(b) deduction combined with Section 80C (Rs 1.5 lakh) and other deductions often tips the balance toward the old regime.

How to Claim Section 24(b) in Your ITR

Step 1: Get Your Home Loan Interest Certificate

Your bank or housing finance company issues an interest certificate (sometimes called a provisional certificate) at the end of each financial year. This breaks down your total EMI payments into principal and interest components. Download it from your lender's online portal or request it from your branch.

Step 2: Choose the Right ITR Form

• ITR-1 (Sahaj): If you have only one house property (self-occupied or let-out) and total income is under Rs 50 lakh
• ITR-2: If you have more than one house property, or capital gains, or any other condition that disqualifies ITR-1

Both forms have a dedicated "Income from House Property" section where you enter the interest details. When filing with 49Tax, the interest details from your Form 16 Part B are auto-extracted, so you only need to verify and confirm.

Step 3: Fill in the House Property Schedule

Report the following:

• Whether the property is self-occupied or let-out
• The annual rental value (for let-out properties)
• Interest paid during the year under Section 24(b)
• Pre-construction interest instalment (if applicable)

Step 4: Verify Against Form 26AS and AIS

Cross-check your interest figures against your Annual Information Statement (AIS), which now reflects data reported by your lender. Mismatches between what you claim and what your lender has reported can trigger notices.

Common Mistakes to Avoid

Claiming under the new regime: The most frequent error. Section 24(b) deduction for self-occupied property is not available under the new tax regime. If you've opted for the new regime, don't include this deduction — it will be disallowed during processing.

Missing the 5-year construction deadline: If your builder delayed possession beyond 5 years from the loan year, your deduction limit drops to Rs 30,000. Many taxpayers continue claiming Rs 2 lakh and receive notices later.

Not splitting correctly for co-owners: If you and your spouse are co-owners and co-borrowers, each of you can claim the deduction proportional to your ownership share — not the entire Rs 2 lakh each on the full interest amount. For instance, with 50:50 ownership, each co-owner can claim up to Rs 1 lakh.

Forgetting pre-construction interest: If you paid interest during the construction phase, make sure to claim it in five instalments starting from the year of possession. Many taxpayers miss this entirely.

Double-counting with Section 80C: The principal repayment goes under Section 80C, and the interest goes under Section 24(b). These are separate deductions — make sure you're not mixing the two or claiming interest under 80C.

Section 24(b) Combined With Other Home Loan Tax Benefits

Your home loan actually qualifies for tax benefits under multiple sections. Here's the full picture:

If you qualify for Section 80EEA (loan sanctioned between April 2019 and March 2022, property stamp value under Rs 45 lakh), you could claim up to Rs 3.5 lakh in interest deduction alone. Note that Section 80EEA has now expired for new loans, but existing eligible loans continue to qualify.

Key Takeaway

Section 24(b) is one of the most significant deductions available to homeowners under the old tax regime. If you're paying a home loan EMI, check your interest certificate, verify the amount against your AIS, and make sure you're claiming every rupee you're entitled to — including pre-construction interest if applicable. For many salaried taxpayers in the Rs 10-20 lakh income range, this single deduction can save Rs 40,000-60,000 in taxes annually. Don't leave that on the table.