Home loan tax benefits for flat buyers under the new Income Tax Act in 2026
The new Income Tax Act 2025, effective from FY 2026-27, changes how Indian taxpayers handle deductions. For flat buyers with a home loan, the key question in 2026 is whether to stay in the old tax regime and claim home loan tax benefit deductions, or switch to the new tax regime and accept lower slab rates without most home loan exemptions. The best choice varies based on the size of your home loan, your repayment stage, and your total taxable income.
This blog by Piramal Realty covers all home loan tax benefits available to flat buyers in 2026, including Section 24(b) for interest, Section 80C for principal, additional deductions under Section 80EE and Section 80EEA for eligible first-time buyers, how the new tax regime compares to the old one, the changes under the new Income Tax Act 2025, and guidance for deciding which regime saves you more tax based on your situation.
Home Loan Tax Benefits Available for Flat Buyers in 2026
Flat buyers in India can claim home loan tax benefits under four provisions, all under the old tax regime. The new tax regime, which has been the default since FY 2024-25 and is further streamlined under the new Income Tax Act 2025, does not allow most of these deductions. Your choice of regime will determine if your home loan provides any tax savings.
Section
Maximum Deduction
Available In
Section 24(b) / Section 22 (new Act), Interest
2 lakh p.a. (self-occupied)
Old regime for self-occupied; both regimes for let-out property
Section 80C / Section 123 (new Act), Principal
1.5 lakh p.a. (combined)
Old regime only
Section 80C / Section 123, Stamp Duty
1.5 lakh (one-time, year of payment)
Old regime only
Section 80EE, Interest Top-up
50,000 p.a. (over Sec 24(b))
Old regime only, loan sanctioned Apr 2016 to Mar 2017
Section 80EEA / Section 130 (new Act), Interest Top-up
1.5 lakh p.a. (over Sec 24(b))
Old regime only, loan sanctioned Apr 2019 to Mar 2022
Standard Deduction
75,000 (new regime) vs 50,000 (old regime)
Both regimes have a higher amount in the new regime
Note: Section 80EE and Section 80EEA are not accepting new applications; they apply only to loans sanctioned within the original windows. If your loan was sanctioned after March 2022, neither applies.
The main home loan tax exemption available to most buyers in the old regime is 3.5 lakh per year, 2 lakh under Section 24(b) for interest, and 1.5 lakh under Section 80C for principal repayment. For eligible first-time buyers with loans sanctioned between April 2019 and March 2022, an additional 1.5 lakh under Section 80EEA brings the total benefit to 5 lakh per year.
How Home Loan Tax Benefits Work Under the New Tax Regime
Under the new tax regime, home loan deductions are largely unavailable. Sections 24(b), 80C, 80EE, and 80EEA are not allowed. The exception is for rented properties: you can still claim the actual interest paid against rental income under Section 24(b), without the 2 lakh cap. But under the new regime, any resulting loss from house property cannot be set off against salary or carried forward, which limits the benefit for landlords with large home loans. For self-occupied flats, no home loan interest deduction is allowed under the new regime.
The new regime offers lower slab rates and a higher standard deduction of 75,000 (up from 50,000 in the old regime for FY 2025-26). For flat buyers in the early years of a large home loan, when interest payments are highest and Section 24(b) deductions are most valuable, the old regime usually results in lower taxes. For buyers in the later years of a loan, when principal repayment is the focus, the situation changes. This decision is explored in the regime-comparison section below.
Section 24(b) and Section 22, Home Loan Interest Deduction Explained
Section 24(b), now called Section 22 under the new Income Tax Act 2025, offers a deduction of up to 2 lakh per year on the interest for a self-occupied property. This deduction applies only to the interest part of your EMI, not the principal. In the early years of a home loan, when interest payments are highest, this deduction can lead to significant tax savings. For a 50 lakh home loan at 9 per cent interest, the first-year interest payment is around 4.4 lakh. The 2 lakh deduction removes that amount from taxation, saving about 62,400 per year for someone in the 30 per cent tax bracket.
Two important conditions and one nuance apply for Section 24(b).
Self-Occupied Property
The 2 lakh limit applies to each taxpayer, not for each property. Starting from FY 2025-26 (according to Budget 2025), you can treat up to two properties as self-occupied without having to include any notional rent in your taxable income. The deemed let-out treatment, which taxes notional rental income, now applies only from the third property onward. This is an important change for buyers of a second home.
Property Under Construction
You cannot take deductions under Section 24(b) during the construction period. Once you get possession, the total interest paid before possession is split into five equal instalments. You can deduct these instalments over five years. The 2 lakh annual cap applies to the total of your current-year interest and the 1/5th instalment from pre-construction. It is not a 2 lakh limit on all your pre-construction interest over 5 years. For instance, if your current-year interest is 1.5 lakh and your annual instalment is 80,000, the total deduction is capped at 2 lakh for that year.
Let-Out Property
You can deduct the full actual interest without a limit, available in both old and new regimes.
Buyers at Piramal Vaikunth, Piramal Aranya, or Piramal Revanta who take possession in FY 2025-26 or FY 2026-27 should ensure their CA correctly maps pre-construction interest to avoid losing this additional deduction.
Section 80C and Section 123, Principal Repayment and Stamp Duty Deductions
Section 80C, now called Section 123 under the new Income Tax Act 2025, allows a home loan deduction of up to 1.5 lakh per year for the principal repayment of your home loan EMI. This 1.5 lakh limit is shared with other Section 80C products, such as PPF, ELSS mutual funds, LIC premiums, EPF contributions, and NSC. Many buyers find that EPF contributions use up the 1.5 lakh limit before they can consider the home loan principal. Planning your 80C allocation throughout the year can help avoid this issue.
Stamp duty and registration fees paid in the year of purchase qualify under Section 80C, but they also fall under the 1.5 lakh combined limit. For a flat purchase in Mumbai, stamp duty is 6 per cent for male buyers and 5 per cent for female buyers (inclusive of the 1 per cent metro cess and local body tax). On a 2 crore flat, that works out to roughly 10 to 12 lakh. The Section 80C deduction remains limited to 1.5 lakh. If you have already used this limit with EPF or other instruments in that year, you cannot claim the stamp duty benefit. It is important to carefully plan your 80C investments in the purchase year.
Section 80EE and Section 80EEA, Additional Benefits for First-Time Buyers
Section 80EE provides an additional home loan interest deduction of 50,000 per year, in addition to the 2 lakh under Section 24(b). It is only available to first-time homebuyers whose loan was sanctioned between April 1, 2016 and March 31, 2017, with a property value not exceeding 50 lakh and a loan amount not exceeding 35 lakh. Due to these restrictions, Section 80EE applies to only a very limited number of buyers in 2026, mainly those who took a small loan more than 9 years ago and still have it outstanding.
Section 80EEA is more relevant for buyers of affordable and mid-segment homes. It offers an additional 1.5 lakh home loan interest deduction per year, beyond Section 24(b), for first-time buyers whose loan was sanctioned between April 1, 2019 and March 31, 2022, and whose property stamp duty value does not exceed 45 lakh. Under the new Income Tax Act 2025, neither Section 80EE nor Section 80EEA has been extended beyond their original eligibility windows. If your loan was sanctioned after March 31, 2022, you do not qualify for either.
The difference between Section 80EE and Section 80EEA: Section 80EE covers loans sanctioned from April 2016 to March 2017 (50K deduction; property value under 50L, loan amount under 35L); Section 80EEA applies to loans sanctioned from April 2019 to March 2022 (1.5L deduction; stamp duty value under 45L). Both provisions are unavailable for loans sanctioned after March 2022. Buyers at Piramal Mahalaxmi, Piramal Aranya, or Piramal Revanta who have transaction values exceeding these limits will not qualify for either. Their main deductions remain Section 24(b) and Section 80C.
Old vs New Tax Regime, Which Is Better If You Have a Home Loan?
This choice is crucial for flat buyers in FY 2025-26 and FY 2026-27. The right answer depends on how your home loan deductions compare to the tax savings from lower slab rates in the new regime.
Factor
Old Regime
New Regime
Which Wins
Section 24(b) interest
2L deduction (self-occupied); unlimited for let-out
Not available for self-occupied; let-out deduction available in both regimes
Old regime for high-interest payers on self-occupied
Section 80C principal
1.5L deduction
Not available
Old regime, especially in early loan years
Section 80EEA
Available (if eligible)
Not available
Old regime for eligible first-time buyers
Tax slab rates
Higher slabs
Lower slabs
Depends on deductions claimed. See break-even analysis below
Standard deduction
50,000
75,000
New regime, higher amount
Break-even point
—
—
Old regime wins when home loan deductions exceed 3.5 to 4L p.a.
The practical break-even: if your total home loan deductions, Section 24(b), Section 80C, and any applicable 80EEA, add up to more than about 3.5 to 4 lakh per year, the old regime usually leads to lower tax for most income levels. Below that amount, the new regime lower slab rates and higher standard deduction usually perform better.
Example: a buyer earning 18 lakh annually with a 60 lakh home loan at 9 per cent has about 5.2 lakh in first-year interest. They can claim 2L under Section 24(b) and 1.5L under Section 80C for a total of 3.5L in deductions. At a 30 per cent tax rate, this results in a saving of about 1.05 lakh. For most buyers with loans over 40 lakh, the old regime tends to yield a lower net tax in the first 8 to 10 years, when interest payments are high.
Home loan tax benefits in 2026 require careful regime choice. It is important to decide with your chartered accountant at the start of each financial year since you can switch between regimes each year. If you are considering a flat at Piramal Aranya, Piramal Mahalaxmi, Piramal Revanta, or Piramal Vaikunth and thinking about a home loan, evaluate the old and new regimes based on your specific income and loan amount. The home loan tax exemption available under the old regime is substantial enough that choosing the wrong regime can cost you 1 to 2 lakh in unnecessary tax each year.
Frequently Asked Questions
Can I claim home loan tax benefits under the new tax regime in 2026?➕
For self-occupied flats, no. The new tax regime does not allow deductions for Section 24(b), Section 80C, or Section 80EEA. The only exception is for rented properties, where you can deduct the actual interest paid against rental income without the 2 lakh cap under Section 24(b). This is available in both regimes. For self-occupied flat buyers, the old regime is needed to access home loan deductions.
What is the maximum home loan tax benefit available for a self-occupied flat?➕
The maximum home loan tax benefit for a self-occupied flat under the old regime is 2 lakh per year for interest under Section 24(b), plus 1.5 lakh under Section 80C for principal, for a total of 3.5 lakh annually. First-time buyers with loans sanctioned between April 2019 and March 2022 can claim up to 1.5 lakh under Section 80EEA, bringing the total to 5 lakh per year.
Can both spouses claim home loan tax benefits on a joint home loan?➕
Yes, a joint home loan tax benefit allows each co-borrower to independently claim deductions based on their share in the loan. Each spouse can claim up to 2 lakh under Section 24(b) and up to 1.5 lakh under Section 80C, provided both co-own the property and repay the loan from separate income sources. This effectively doubles the household tax savings.
Can I claim home loan tax benefits on an under-construction flat?➕
You cannot claim Section 24(b) home loan interest deductions during construction. Pre-possession interest builds up and can be deducted in five equal annual installments from the year you take possession, subject to an annual combined cap of 2 lakh, which includes current-year interest and the instalment together. You also cannot claim the Section 80C principal repayment deduction until you take possession.
Regarding stamp duty, the Income Tax Act allows you to claim stamp duty paid under Section 80C in the year you make the payment. However, different chartered accountants interpret the treatment of stamp duty paid before possession differently. Some apply it in the year of payment, while others link it to the year of actual possession. You should verify this point with your chartered accountant before filing, as it is not a universally agreed-upon practice.
What is the difference between Section 80EE and Section 80EEA?➕
Section 80EE applies to loans sanctioned from April 2016 to March 2017, offers an additional deduction of 50,000, and requires the property value to be below 50 lakh and the loan to be below 35 lakh. Section 80EEA applies to loans sanctioned from April 2019 to March 2022, offers an additional deduction of 1.5 lakh, and requires the stamp duty value to be below 45 lakh. Both are unavailable for loans sanctioned after March 2022 and are not allowed in the new tax regime.
What documents are required to claim home loan tax benefits?➕
The required documents include a home loan interest certificate from the bank (issued annually, showing the split between interest and principal), a loan sanction letter, property registration documents, a stamp duty payment receipt (for the 80C claim), and a completion or possession certificate for Section 24(b) interest claims. For joint loans, each co-borrower needs the certificate reflecting their individual share of repayment.
Disclaimer - This article is based on the information publicly available for general use as well as reference links mentioned herein. The views expressed above are for informational purposes only based on industry reports and related news stories. Piramal Realty does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information. Piramal Realty expressly disclaims/disowns any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided here in.
