Home Loan Tax Benefits: Interest, Principal, Stamp Duty and Joint Loans (Tax Year 2026-27)
CA Meet Dhrangadhariya 
June 18, 2026
CA Meet Dhrangadhariya June 18, 2026
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Last updated: 02 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP
Quick summary
A home loan can reduce your tax in several ways, but each benefit has its own section, limit and regime. The Income-tax Act, 2025 has renumbered them (section 24(b) is now section 22, 80C is now section 123, and 80EE and 80EEA are now sections 130 and 131). This post puts them together.
| Benefit | Section (2025 Act) | Limit | Old regime | New regime |
|---|---|---|---|---|
| Interest, self-occupied house | 22(1)(b), 22(2) | ₹2,00,000 (₹30,000 if conditions are not met) | Yes | No |
| Interest, let-out house | 22(1)(b) | No limit | Yes | Yes |
| Principal repayment, stamp duty, registration | 123, Schedule XV | ₹1,50,000 with other qualifying items | Yes | No |
| Extra interest for first-time buyers | 130 (loan sanctioned 2016-17), 131 (loan sanctioned 2019-22) | ₹50,000 and ₹1,50,000 | Only for qualifying old loans | No |
Interest payable on capital borrowed to acquire, construct, repair, renew or reconstruct a house is deducted from its annual value. Our post on the home loan interest deduction explains the ₹2,00,000 and ₹30,000 limits, the five year completion condition, the lender’s certificate and pre-construction interest, which is claimed in five equal instalments.
Section 123 allows a deduction, within ₹1,50,000 for all items together, for the amount spent on purchase or construction of a residential house. Schedule XV, paragraphs 1(r) and 3, say this includes:
It does not include the admission fee, cost of shares and initial deposit paid to become a member of a society or company, the cost of additions, alterations, renovation or repairs after the completion certificate was issued or after the house was occupied or let, or any expenditure that is deductible under section 22 (the interest).
Five year rule. If you transfer the house before five years from the end of the tax year in which you took possession, or you receive back any such sum, the deductions already allowed are added to your income of the year of transfer (Schedule XV, paragraph 4).
Section 123 shares its ₹1,50,000 with provident fund contributions, life insurance premiums, tuition fees and other items, so a salaried person with an employee PF contribution may use up much of it before the home loan principal.
These are the old sections 80EE and 80EEA. They remain in the Act for loans that met their conditions and are old regime only:
| Point | Section 130 (earlier 80EE) | Section 131 (earlier 80EEA) |
|---|---|---|
| Extra interest deduction | Up to ₹50,000 a year | Up to ₹1,50,000 a year |
| Loan sanctioned | 01/04/2016 to 31/03/2017 | 01/04/2019 to 31/03/2022 |
| Loan or property limit | Loan up to ₹35 lakh; house value up to ₹50 lakh | Stamp duty value up to ₹45 lakh |
| Other conditions | You own no house on the date of sanction; loan from a bank or housing finance company | Same, and you are not eligible under section 130 |
| Overlap | The same interest cannot be claimed under any other provision | The same |
A loan sanctioned today cannot claim either section.
In the new regime, the interest deduction on a self-occupied house, the section 123 deduction and sections 130 and 131 are not allowed (section 202(2)). Only the interest on a let-out house is, and any loss from house property cannot be set off against other income or carried forward. If a home loan is your main deduction, compare both regimes before you choose (our post on saving tax by salary level gives the break-even).
Co-owners with definite shares are taxed separately on their shares, and the relief for a self-occupied house is available to each of them (section 24). Co-owners who are also co-borrowers and pay their share of the EMI can each claim:
A joint loan where only one person pays does not give the other any benefit. Keep the repayment record in each person’s bank account.
You buy a flat for self-occupation, with the loan sanctioned in 2026. In the first year you pay ₹2,40,000 of interest, ₹1,20,000 of principal and ₹1,00,000 stamp duty and registration. You have no other section 123 items.
Interest under section 22 (up to ₹2,00,000 for a self-occupied house, the whole amount for a let-out house), principal repayment and stamp duty and registration charges under section 123 within ₹1,50,000, and for some older loans an extra deduction under section 130 or 131.
Only interest on a let-out house. Interest on a self-occupied house and the section 123, 130 and 131 deductions are old regime items (section 202(2)).
Yes. Stamp duty, registration fee and other transfer expenses are part of the amount spent on purchasing a house that qualifies under section 123, in the year you pay them, within the ₹1,50,000 limit shared with the other items.
If you transfer the house within five years from the end of the tax year in which you got possession, the section 123 deductions already allowed for it are added back to your income in the year of transfer (Schedule XV, paragraph 4).
Only if the loan was sanctioned in the window the section requires: 01/04/2016 to 31/03/2017 for section 130 (₹50,000) and 01/04/2019 to 31/03/2022 for section 131 (₹1,50,000), with the other conditions. A loan taken now does not qualify.
Yes, if each is a co-owner and a co-borrower and pays his or her share of the instalments. Each can claim the interest and section 123 limits for the share he or she owns and pays.
This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.
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