How do you use the Section 24 tax benefit calculator?
- Enter the interest you will pay this year (your lender’s certificate shows it), and say if the home is lived in or let out.
- Enter your other taxable income, and any interest you paid before possession. For a let-out home, add the rent.
- Read how much interest you can deduct and the tax it saves. Loan purpose, the five-year completion rule and property tax are under “Adjust loan purpose, completion and property tax”.
What does Section 24 allow now?
Section 24(b) of the 1961 Act is now section 22 of the Income-tax Act, 2025, in force from 1 April 2026. It lets you deduct interest on money borrowed to buy, build, repair or renew a house from your income from house property.
- Home you live in: up to ₹ 2 lakh a year in total across such homes, if the loan was for buying or building and the work was completed within five years from the end of the year you borrowed. Otherwise, and for repair loans, the limit is ₹ 30,000. Old regime only.
- Let-out home: no cap on the interest, but a loss from house property can be set off against salary or other income only up to ₹ 2 lakh a year in the old regime. The rest carries forward for up to eight years, against house property income only. The new regime allows no set-off at all.
- Interest before possession: the total is claimed in five equal parts, starting the year the home is completed. On a home you live in, these parts sit inside the ₹ 2 lakh cap.
How the deduction is worked out
1
Interest for the year
Interest paid + pre-construction interest ÷ 52
Lived in
min(interest, ₹ 2,00,000) or min(interest, ₹ 30,000)3
Let out
(Rent − property tax) × 70% − interest; loss set off up to ₹ 2,00,0004
Tax saved
Tax without the deduction − tax with it, slab rates + 4% cessWorked example: ₹ 2.5 lakh interest on a home you live in
With ₹ 12 lakh of other taxable income, ₹ 2 lakh is deductible and the other ₹ 50,000 is lost. The deduction saves ₹ 62,400 in the old regime. If the home had not been completed within five years, only ₹ 30,000 would count, saving ₹ 9,360.
Worked example: pre-construction interest, and a let-out flat
A buyer who paid ₹ 3 lakh of interest before possession and pays ₹ 1.5 lakh this year adds ₹ 60,000, one-fifth, to this year’s figure. The total of ₹ 2,10,000 is still capped at ₹ 2 lakh. Take a flat let out at ₹ 3 lakh a year with ₹ 10,000 of property tax and ₹ 5 lakh of interest: the loss is ₹ 2,97,000. ₹ 2 lakh is set off this year, saving ₹ 1,25,736 in the old regime, and ₹ 97,000 carries forward.
What should you keep in mind?
- Keep the interest certificate from your lender; the ₹ 2 lakh limit needs one.
- Joint owners who are co-borrowers each get their own ₹ 2 lakh limit on their share of the interest.
- Principal repaid is a separate deduction. See the Section 80C tax savings calculator, and compare both regimes with the home loan tax benefit calculator.
Frequently asked questions
On a home you live in, up to ₹ 2 lakh a year in the old regime, if the loan was to buy or build and the home was completed within five years of the end of the year you borrowed. Otherwise the limit is ₹ 30,000. If the home is let out, all the interest is deducted from the rent.
It is section 22, which covers deductions from income from house property: 30% of the annual value and interest on borrowed capital. The ₹ 2 lakh and ₹ 30,000 limits are unchanged. The new Act applies from tax year 2026-27, so returns for that year will use the new section numbers.
Interest paid before the home is completed is added up and claimed in five equal parts, starting with the year of completion. On a home you live in, each part counts inside the ₹ 2 lakh yearly cap along with the current year’s interest. ₹ 3 lakh of such interest adds ₹ 60,000 a year.
Not for a home you live in. If it is let out, the interest is still deducted from the rent, but the resulting loss cannot be set off against salary or other income, and cannot be carried forward. The old regime allows up to ₹ 2 lakh of set-off a year.
In the old regime, the part above ₹ 2 lakh is carried forward for up to eight years and can be set off only against future income from house property. You need to file your return on time to carry it forward. Indicative only. Please verify with your Chartered Accountant before acting.
The lower limit applies to a home you live in when the loan was for repairs or renewal, or when buying or building was not completed within five years from the end of the tax year in which you borrowed. Delays in an under-construction project can push you into this limit.
Related answers and guides
- Pre-Construction Home Loan Interest: Can You Claim It?
- Home Loan Tax Benefit Under the Income-tax Act 2025
- First-Time Home Buyer Bangalore Guide (2026): Costs, Loans
- DC Conversion Karnataka: Section 95 Rules for Plot Buyers
Sources
- Income-tax Act, 2025, section 22 (interest on borrowed capital, ₹ 2 lakh and ₹ 30,000 limits, pre-construction interest in five instalments), in force from 1 April 2026; Budget 2026 clarification on pre-construction interest within the cap.
- Income Tax Department guidance on set-off of house property loss (₹ 2 lakh, old regime) and eight-year carry forward; Finance Act, 2026 slabs for tax year 2026-27. Checked 19 Oct 2026.
Indicative only. Please verify with your Chartered Accountant before acting.
Buying a home in Bengaluru? Talk to an acre&key advisor.