Home Loan Tax Benefits in ITR Filing (2026): Claim Deductions Under Section 24(b) & Other Provisions
Anurag Sodani • July 3, 2026
Quick Summary: A home loan tax benefit can meaningfully reduce your taxable income when you know which provisions apply to your situation. Under the old tax regime, borrowers can claim up to ₹2 lakh in interest deduction under Section 24(b) and up to ₹1.5 lakh in principal repayment under Section 80C, with additional benefits available to eligible first-time buyers. The new tax regime removes most of these deductions for self-occupied property but retains full interest deduction for let-out property. This guide breaks down every applicable home loan tax benefit for ITR filing in 2026, how to declare your loan correctly, and the documentation you’ll need to avoid processing delays.
Why Home Loans Offer Tax Benefits During ITR Filing
The Income Tax Act encourages long-term home ownership by allowing tax deductions on both the interest and principal components of your home loan EMI. This effectively lowers the real cost of borrowing for homeowners who opt for the old tax regime.
A home loan tax benefit isn’t automatic — you need to actively claim it in your ITR each year by declaring the correct property status (self-occupied or let-out) and entering the interest and principal figures from your lender’s certificate.
Tax Deduction Under Section 24(b) for Home Loan Interest
Section 24(b) is the primary home loan tax benefit available to borrowers. For a self-occupied property, you can claim up to ₹2 lakh in interest annually, applicable only under the old tax regime. For a let-out property, you can claim a deduction for the entire interest amount without any cap. However, if your loss from house property exceeds ₹2 lakh in a financial year, you can carry forward the excess loss and set it off only against future house property income, not against income from other heads.
If your home is still under construction, the interest you pay during this period accumulates. Once you receive possession, you can claim this pre-construction interest in five equal annual instalments, starting from the year of possession. Don’t miss claiming this benefit.
Principal Repayment Benefits Under Other Income Tax Provisions
Beyond interest, the principal portion of your EMI is deductible under Section 80C, up to ₹1.5 lakh per year. The ₹1.5 lakh limit under Section 80C applies collectively to all eligible investments, including PPF, ELSS, life insurance premiums, and home loan principal repayment. As a result, your home loan principal repayment shares this overall deduction limit with other eligible investments.
You can also claim stamp duty and registration charges under Section 80C, but only in the financial year in which you pay them and only if you opt for the old tax regime.
First-time buyers meeting specific conditions may also access Section 80EE (₹50,000, for loans sanctioned 2016-17) or Section 80EEA (₹1.5 lakh, for affordable housing loans sanctioned 2019-22), each with distinct eligibility windows.
Home Loan Tax Benefits in Old vs New Tax Regime
| Benefit | Old Regime | New Regime |
|---|---|---|
| Section 24(b) interest (self-occupied) | Up to ₹2 lakh | Not available |
| Section 24(b) interest (let-out) | Unlimited | Unlimited |
| Section 80C principal repayment | Up to ₹1.5 lakh | Not available |
| Section 80EE / 80EEA | Available if eligible | Not available |
| Loss set-off (let-out) against salary | Up to ₹2 lakh | Not allowed |
The new tax regime, now the default from AY 2024-25 onward, offers lower slab rates but strips out most home loan-linked deductions for self-occupied property. If you have a substantial home loan and other eligible deductions, it’s worth running both regime calculations before filing, since the gap can be significant.
How to Declare Your Home Loan While Filing ITR
- Determine whether your property is self-occupied, let-out, or deemed let-out (if you own more than two houses).
- Select the appropriate ITR form based on your income and property profile.
- Navigate to the “Income from House Property” schedule.
- Enter interest paid under Section 24(b), and separately claim principal repayment under Section 80C in the deductions section.
- If eligible, add Section 80EE or 80EEA amounts in their respective fields.
- Cross-verify all entered figures against your AIS and Form 26AS before submission.
The home loan EMI calculator can help you separate your annual interest and principal components ahead of filing, so you’re not scrambling for numbers at the last minute.
Documents Required to Claim Home Loan Tax Benefits
- Interest certificate (Section 24b breakup) from your lender
- Loan sanction letter
- Property ownership and possession documents
- Stamp duty and registration payment receipts, if claiming under Section 80C
- Rental agreement and municipal tax receipts, if the property is let out
Common Mistakes to Avoid While Claiming Home Loan Deductions
- Claiming Section 24(b) or 80C benefits after opting into the new tax regime
- Not separating principal and interest correctly when self-calculating from EMI statements instead of using the lender’s certificate
- Ignoring the five-year construction completion deadline that reduces the deduction limit
- Failing to claim eligible pre-construction interest in instalments.
- Failing to reconcile declared figures with AIS, leading to processing delays or notices
FAQs
What is the main home loan tax benefit available under the old regime?
The combination of Section 24(b) interest deduction (up to ₹2 lakh) and Section 80C principal deduction (up to ₹1.5 lakh) forms the core home loan tax benefit for most borrowers.
Are home loan tax benefits available under the new regime?
Only for let-out properties, where interest remains fully deductible against rental income. Self-occupied property deductions are not available under the new regime.
Which ITR form should I use to declare a home loan?
ITR-1 works for most salaried individuals with a single self-occupied property and income under ₹50 lakh; ITR-2 is required for multiple properties, capital gains, or higher income levels.
Can I claim both interest and principal deductions on the same home loan?
Yes, interest is claimed under Section 24(b) and principal under Section 80C — they’re independent limits that can both be claimed together under the old regime.
Do I need an interest certificate to claim the deduction?
Yes, your lender’s annual interest certificate is the primary document needed to substantiate your claim during filing and any subsequent scrutiny.
For a closer look at eligibility for various loan products, visit HomeFirst Finance’s home loan eligibility calculator or explore the blog section for related housing finance guides.
