Home Loan Tax Benefits: What Sections 24 and 80C Really Give a Bengaluru Buyer

A Bengaluru buyer chose his flat partly on the strength of a broker's line that a home loan would hand him three and a half lakh in tax savings every year. When he filed his return, his chartered accountant asked a question that changed the whole calculation: which tax regime was he filing under? He was on the new regime, the default, where those home loan deductions for a self-occupied home simply do not apply. The savings were real, but only for someone who had consciously chosen the old regime, and no one had told him that.

The short answer. Under the old tax regime, a home loan on a self-occupied property can give you a deduction of up to 2 lakh a year on the interest under Section 24(b) and up to 1.5 lakh on the principal under Section 80C, a combined benefit of up to 3.5 lakh, and roughly double that on a joint loan where both co-owners qualify. Under the new tax regime, which is now the default, these deductions for a self-occupied home are not available. The trade-off to understand: the benefits are genuine and worth planning for, but only if you file under the old regime, so this is a decision to make consciously, ideally with a tax adviser, not to assume from a marketing slide.

What home loan tax benefits exist, and under which regime?

The two central home loan deductions for a self-occupied property are the interest deduction under Section 24(b) and the principal deduction under Section 80C, and both belong to the old tax regime. Under that regime, you can claim up to 2 lakh a year on the interest you pay and up to 1.5 lakh a year on the principal you repay, which together can reduce your taxable income by as much as 3.5 lakh. These are meaningful numbers for a salaried buyer, and they are a legitimate reason many people factor tax into their home purchase.

The crucial caveat is the regime. The new tax regime is now the default, and it removes these home loan deductions for a self-occupied property, so a homeowner filing under the new regime generally gets no direct tax benefit from the loan on the home they live in. That is why the marketing claim of a fixed annual saving is only true for old-regime filers. If these deductions matter to you, you must actively choose the old regime when you file, and whether that is worth it depends on your overall tax position. The definitive reference for the rules is the Income Tax Department, and a tax adviser can tell you which regime leaves you better off. This choice is not only about the home loan. The old regime rewards people with a range of deductions and exemptions, from provident fund and insurance to house rent allowance, while the new regime offers lower slab rates but strips most of them out. So the honest way to think about it is not whether the home loan saves you tax in isolation, but whether your whole set of deductions, the home loan included, beats the simpler lower-rate new regime for your income. For many salaried buyers with a large loan it does, but it has to be worked out, not assumed.

Section 24(b): the interest deduction

Section 24(b) is the deduction for the interest you pay on a home loan, and for a self-occupied property under the old regime it is capped at 2 lakh a year. Because a home loan's early years are interest-heavy, this cap is often fully used in the initial years of the loan, which is when the interest component of your instalment is at its largest. It applies to the loan taken to buy or construct the home you live in, subject to the conditions in the Act. For a let-out property the treatment differs, and the interest position there is not subject to the same 2 lakh self-occupied cap, though set-off rules apply, so if you are buying to let, the calculation is different and worth checking specifically.

For a buyer, the practical point is that the interest deduction is the larger of the two benefits in the early years, and it is the one most affected by the regime choice. If you are counting on it, confirm both that you will file under the old regime and that your interest is high enough to use the cap, rather than assuming the full 2 lakh applies automatically.

Section 80C: the principal and stamp duty deduction

Section 80C covers the principal you repay on the home loan, within an overall Section 80C limit of 1.5 lakh a year that you also share with other eligible investments such as provident fund and life insurance. In practice, this means the principal repayment competes for space with your other 80C claims, so it does not always add a full 1.5 lakh on top of what you already claim. In the year you buy, the stamp duty and registration charges you pay can also be claimed within this same Section 80C limit, which is a useful one-time benefit in the year of purchase.

As with Section 24(b), all of this sits inside the old regime. Under the new regime, the Section 80C principal deduction for the home loan is not available, so the same 1.5 lakh disappears for a self-occupied homeowner who files under the new regime. When you plan, treat the 80C benefit as real but shared and regime-dependent, rather than as a clean additional deduction you can always rely on. A practical example makes the point. If your provident fund and insurance premiums already fill most of the 1.5 lakh Section 80C limit, the principal you repay on the home loan may add little further deduction, because the ceiling is shared. The interest deduction under Section 24(b) sits separately, which is why, for most borrowers, the interest side is where the real home loan tax saving comes from.

Old regime versus new regime at a glance

Here is how the main home loan benefits compare across the two regimes for a self-occupied property.

The table makes the decision concrete: for a self-occupied home, the old regime carries the deductions and the new regime does not. Which leaves you better off overall depends on your income and your other deductions, so run both before you file.

How can a joint loan increase the benefit?

A joint home loan can roughly double the deductions, because each co-owner who is also a co-borrower can claim the benefits on their own share, subject to the same per-person caps and the old regime. Where two spouses jointly own the home and jointly service the loan, each can potentially claim the interest and principal deductions up to their individual limits, which is how a household can reach a combined benefit well above what a single borrower could. The key conditions are joint ownership and joint borrowing, along with each person filing under the old regime and having the income to use the deductions.

This is one of the practical reasons couples consider a joint loan, and it connects to the wider mechanics we covered in our guide to a joint home loan and co-applicant in Bengaluru. Just remember that the tax benefit follows ownership and borrowing together; adding someone only as a co-borrower without ownership, or vice versa, does not automatically create the deduction, so structure it correctly from the start.

What is your home loan tax-benefit checklist?

Use this while planning your purchase and again before you file your return.

1. Decide, ideally with a tax adviser, whether the old or new regime leaves you better off.
2. Remember the home loan self-occupied deductions apply only under the old regime.
3. Claim interest under Section 24(b) up to 2 lakh a year on a self-occupied home.
4. Claim principal under Section 80C within the shared 1.5 lakh limit.
5. Claim stamp duty and registration within Section 80C in the year you pay them.
6. For a joint loan, ensure both are co-owners and co-borrowers to claim separately.
7. Confirm the current rules on the Income Tax Department portal before relying on any figure.

Frequently asked questions

How much tax can I save on a home loan?

Under the old tax regime, a self-occupied home loan can give up to 2 lakh a year of interest deduction under Section 24(b) and up to 1.5 lakh of principal under Section 80C, a combined benefit of about 3.5 lakh, and roughly double on a qualifying joint loan. Under the new regime, these deductions for a self-occupied home are not available.

Do home loan tax benefits apply under the new tax regime?

Generally no, for a self-occupied property. The new tax regime, now the default, removes the Section 24(b) interest and Section 80C principal deductions for a home you live in. To claim these, you must consciously file under the old regime. Let-out property interest is treated differently, so check your specific situation with a tax adviser or the Income Tax portal.

Can I claim stamp duty and registration for tax?

Yes, but within limits. Under the old regime, stamp duty and registration charges can be claimed within the overall Section 80C limit of 1.5 lakh, and only in the year you pay them. Because Section 80C is shared with other investments, it may not add the full amount, and it is not available under the new regime.

Does a joint home loan give more tax benefit?

It can, roughly doubling the deductions, because each co-owner who is also a co-borrower may claim the interest and principal benefits up to their own limits, under the old regime. The conditions are joint ownership and joint borrowing together, plus each person filing under the old regime with enough income to use the deductions. Adding someone in name only does not create the benefit.

Last updated 2026-09-29. PropNewz Team.