Home Loan Tax Benefits: Section 24(b) and 80C for a Bengaluru Buyer

A Bengaluru buyer taking a home loan for a flat in Panathur in September 2026 had budgeted around a tax saving he had read about years ago, only to find that under the tax regime he had drifted into, most of that saving no longer applied. His interest and principal were real, but whether he could deduct them depended entirely on which regime he was in. Home loan tax benefits are still generous, but they now come with a condition many buyers miss, and getting that wrong can quietly change the true cost of a loan by a large amount each year.

The short answer. Under the old tax regime, a home loan buyer can deduct up to two lakh rupees a year of interest on a self-occupied home under Section 24(b), and up to one and a half lakh of principal, along with stamp duty and registration, under Section 80C. These benefits are generally not available for a self-occupied home under the new tax regime, which is now the default. The trade-off is that the old regime lets you claim these deductions but keeps higher slab rates, so whether the benefits are worth more than the new regime's lower rates depends on your own numbers.

What home loan tax benefits can a buyer claim?

A home loan buyer can claim two main deductions, one on the interest and one on the principal, but only under the old tax regime. The interest you pay is deductible under Section 24(b) of the Income Tax Act, and the principal you repay is deductible under Section 80C, within that section's overall limit. In addition, the stamp duty and registration charges you pay can be claimed under Section 80C in the year you pay them. Together these can reduce taxable income meaningfully for a borrower who chooses the old regime.

The important word is choose. These deductions do not apply automatically. They belong to the old tax regime, and a buyer who is in the new regime does not get them on a self-occupied home. So the first tax question for a home loan buyer is not how much to claim, but which regime makes them better off overall. That single choice, made once a year at the time of filing, can be worth more than any negotiation on the interest rate, which is why it deserves at least as much attention.

How much interest can I deduct under Section 24(b)?

For a self-occupied home under the old regime, the interest deduction under Section 24(b) is capped at two lakh rupees a year. This is the headline home loan benefit, and for many borrowers the annual interest easily reaches or exceeds that cap in the early years of the loan, when interest is the larger part of each payment. The deduction is available once you have possession, and it applies to the interest on a loan taken to buy or build the home you live in.

The treatment differs for a let-out property. There, the interest itself is deductible in full, but the loss from house property that you can set off against your other income in a year is capped at two lakh rupees, with the balance carried forward. For a buyer, the practical point is that the two lakh figure appears in both cases, but it means different things, so it is worth being clear about whether the home is self-occupied or let out.

What does Section 80C cover on a home loan?

Section 80C covers the principal you repay, up to one and a half lakh rupees a year, but that limit is shared with everything else you claim under 80C. Your provident fund, life insurance premiums, and other 80C investments all draw on the same one and a half lakh ceiling, so in many households the principal repayment does not get the full amount to itself. The stamp duty and registration charges you pay on the purchase are also eligible under 80C, but only in the financial year in which you actually pay them.

There is a condition worth remembering. If you sell the home within five years of the end of the year in which you took possession, the 80C deductions you claimed on the principal can be reversed and added back to your income. So the principal benefit assumes you hold the property for at least that period. The table below summarises the main deductions, their sections, limits, and the regime under which they apply.

Do these benefits apply under the new tax regime?

For a self-occupied home, the Section 24(b) interest deduction and the Section 80C principal deduction are generally not available under the new tax regime. The new regime, which is now the default, offers lower slab rates in exchange for giving up most deductions, and the common home loan benefits on a self-occupied property are among those given up. This is the single most important thing for a home loan buyer to understand in 2026, because a benefit you assumed you had may simply not exist in the regime you are being taxed under.

This does not automatically make the old regime better. If your total deductions, including home loan interest, 80C, and others, are large, the old regime can leave you paying less overall. If they are modest, the new regime's lower rates may win despite the lost deductions. The right answer depends on your income and your actual deductions, so run both regimes on your own numbers, or ask a tax adviser to, before assuming the loan will save you tax.

How does an under construction loan affect the timing?

Interest you pay while the home is under construction is not lost, but you cannot claim it until construction is complete and you have possession. This pre-construction interest is aggregated and then deducted in five equal yearly installments starting from the year you get possession, still within the overall two lakh cap for a self-occupied home. So a buyer of an under construction flat should expect the interest benefit to begin only after handover, not from the first payment, and should not count the relief as a reason the loan feels cheaper during the build.

This timing matters for budgeting. If you are servicing interest during construction and also paying rent elsewhere, the tax relief on that interest arrives later and in parts, not immediately. For how the interest itself is structured during construction, see our note on the home loan EMI and repo rate math, and for how co-owners share these benefits, our guide on the joint home loan and co-ownership tax.

How should a buyer think about all this?

Treat the home loan tax benefit as a real but conditional saving, not a guaranteed one. It can lower your effective cost of borrowing, but only under the old regime and only within the limits and timing the law sets. This is buyer guidance, not investment advice, and the point is not to buy a home for the tax break, but to price the loan correctly once you have decided to buy. A buyer evaluating a project such as Purva Panathur would compare the two regimes on their own figures before assuming any tax saving. The benefit is worth claiming where it applies, and worth not counting on where it does not. Above all, decide which regime you are in before you lean on the numbers, because a saving assumed under the wrong regime is not a saving at all, only a gap in the budget you will meet later.

A seven step home loan tax checklist

Use this order when you plan the loan, and revisit it again at the time of tax filing.

1. Decide whether the home will be self-occupied or let out.
2. Estimate your annual interest and compare it with the two lakh cap.
3. Add principal repayment and check the one and a half lakh 80C limit.
4. Include stamp duty and registration under 80C in the year you pay them.
5. For an under construction home, plan for interest relief only after possession.
6. Compare the old and new regimes on your own income and deductions.
7. Keep the property for at least five years to avoid an 80C reversal.

Frequently asked questions

How much home loan interest can I deduct? Under the old tax regime, up to two lakh rupees a year on a self-occupied home under Section 24(b), a cap many borrowers reach early in the loan. For a let-out property the interest is deductible in full, though the house property loss you set off against other income in a year is limited to two lakh rupees.

Can I claim these benefits under the new tax regime? Generally no, for a self-occupied home. The new tax regime, now the default, gives lower slab rates in exchange for most deductions, and the Section 24(b) and Section 80C home loan benefits on a self-occupied property are among those given up. Run both regimes on your own numbers before assuming the loan saves you tax.

Are stamp duty and registration charges tax deductible? Yes, under Section 80C, but only in the year you pay them, and within the same one and a half lakh limit shared with your other 80C claims. It is a one time benefit in the year of purchase, unlike the interest deduction that recurs each year, and it applies under the old regime, not the new one.

When can I start claiming interest on an under construction flat? After you take possession. Interest paid during construction is collected together and then deducted in five equal yearly installments from the year of possession, within the overall two lakh cap for a self-occupied home. So the interest relief on an under construction purchase begins only after handover and is spread over five years, not claimed from the first payment.

Last updated 2026-09-19. PropNewz Team.