A home loan is the single biggest tax-saving tool most Indians ever use. Done right, it can reduce your taxable income by up to ₹3.5 lakh a year — and a joint loan can push that to ₹7 lakh for a couple. Here's a clear, 2026-updated guide to every section you can claim under.
The Two Main Sections
Your EMI has two parts — principal and interest — and each gets its own deduction under the old tax regime.
| Section | What it covers | Maximum per year |
|---|---|---|
| Section 24(b) | Interest paid on home loan (self-occupied) | ₹2,00,000 |
| Section 80C | Principal repayment + stamp duty & registration | ₹1,50,000 |
| Section 80EEA | Extra interest for eligible first-time buyers | ₹1,50,000 |
Section 24(b) — Interest Deduction (up to ₹2 Lakh)
You can deduct up to ₹2 lakh of home loan interest per year for a self-occupied property. For a let-out (rented) property, there is technically no upper limit on the interest deduction, but the overall house-property loss you can set off against other income is capped at ₹2 lakh per year.
Section 80C — Principal Deduction (up to ₹1.5 Lakh)
The principal portion of your EMI qualifies under Section 80C, within the overall ₹1.5 lakh 80C ceiling (shared with PPF, ELSS, LIC, etc.). Stamp duty and registration charges can also be claimed under 80C — but only in the financial year you actually paid them.
Section 80EEA — Extra ₹1.5 Lakh for First-Time Buyers
Eligible first-time homebuyers can claim an additional ₹1.5 lakh of interest beyond the ₹2 lakh under 24(b), subject to conditions on the property's stamp duty value and the loan sanction date. That can take total interest benefit to ₹3.5 lakh for a qualifying buyer.
Joint Home Loan — Double Your Benefits
This is the biggest opportunity most people miss. If you and your spouse are both co-owners and co-borrowers, each of you claims the deductions separately:
| Deduction | Single borrower | Joint (couple) |
|---|---|---|
| Interest (24b) | ₹2 lakh | ₹4 lakh |
| Principal (80C) | ₹1.5 lakh | ₹3 lakh |
| Total | ₹3.5 lakh | ₹7 lakh |
The key condition: both must be co-owners of the property and co-applicants on the loan, and each should contribute to the EMI from their own income.
Important: New Regime vs Old Regime
Since the new tax regime is now the default, remember: for a self-occupied home, the new regime does not allow 80C or 24(b). If your home loan deductions are large, the old regime may save you more tax overall. Work this out before filing — see our detailed new vs old tax regime comparison.
Calculate Your Numbers
To plan, first find your annual interest and principal split using the amortization schedule in our Home Loan EMI Calculator. Then compute your tax under both regimes with the Income Tax Calculator to see exactly how much the home loan saves you. Thinking of prepaying instead? Read prepayment vs investment — prepaying reduces future interest and therefore your 24(b) deduction.