The biggest tax break for homeowners
A home loan EMI has two parts: principal (the amount borrowed) and interest (the cost of borrowing). Under the Old Regime, the principal goes into your 80C basket, while the interest is claimed separately under Section 24(b), under the head "Income from House Property".
The ₹2 lakh number
Section 24(b) allows up to ₹2,00,000 of home loan interest a year on a self-occupied house (Source: Section 24(b), Income Tax Act).
| Property type | Interest cap |
|---|---|
| Self-occupied | ₹2,00,000 |
| Self-occupied, fails 5-year/repairs rule | ₹30,000 |
| Let-out | No upper limit (loss set-off capped) |
Conditions for the full ₹2 lakh
- The loan was taken to buy or build a house.
- The loan was taken on or after 1 April 1999.
- Construction or purchase completes within 5 years from the end of the year the loan was taken.
Fail the 5-year rule, or borrow for repairs, and the cap drops to just ₹30,000.
If the house is let out
Declare the rental income, but there is no upper limit on interest you can deduct against it. However, if this creates a loss under "House Property", only ₹2 lakh of that loss can be set off against salary/other income this year; the rest carries forward.
What you should do
- Get your bank's interest certificate showing principal and interest split.
- Put principal in 80C, interest in Section 24b.
- Check the 5-year completion rule if it is a newer purchase.
Common mistake
Claiming the full EMI under one section. Only the interest goes under 24b and only the principal under 80C; lumping them together overstates the deduction.
How LastMinute ITR helps
Home loan interest gets tricky with pre-construction amounts. LastMinute ITR reads your interest certificate and tells you exactly what goes into Section 24b versus the 80C basket, while comparing old vs new regime, since 24b needs the old regime. You file and e-verify on incometax.gov.in.