Section 24b of income tax act lets you deduct interest on a loan taken to buy, build, repair or rebuild a house from your house property income. For a home you live in, the limit is ₹2,00,000 a year and only in the old regime; for a house you rent out, all the interest is deductible in both regimes, though a resulting loss can be set off against other income only in a limited way.
Section 24 also gives a flat 30% standard deduction on rent, which is how tax on rental income is worked out. Figures here are for FY 2025-26 under the old Act; the scheme carries on unchanged into tax year 2026-27. Principal repayment is a separate claim under section 80C.
Quick facts
Self-occupied limit
₹2,00,000 a year for purchase or construction (old regime)Repair or late construction
₹30,000 a yearLet-out house
Full interest, no cap, both regimesPre-construction interest
In five equal parts from the year construction is finishedStandard deduction on rent
30% of net annual value under section 24(a)Loss set-off
Old regime: up to ₹2 lakh a year against other income; new regime: not allowedProof
Interest certificate from the lender
Section 24 of income tax act: how rental income is taxed
| Step | What you do |
|---|---|
| Gross annual value | Rent received or receivable for the year |
| Less municipal taxes | Property tax actually paid by you in the year |
| Net annual value | Gross value minus municipal taxes |
| Less 30% under 24(a) | Flat deduction for repairs and upkeep, no bills needed |
| Less interest under 24(b) | Interest for the year on the housing loan |
| Income from house property | Added to other income and taxed at your slab rates |
There is no separate rental income tax slab. Rent is taxed at the same slab rates as the rest of your income. Tenants who pay over ₹50,000 a month must deduct 2% TDS, which you claim against your own tax.
Section 24b of income tax act: limits for each kind of house
| Case | Old regime | New regime |
|---|---|---|
| Self-occupied, loan to buy or build, built within five years of the end of the year of borrowing | ₹2,00,000 | Nil |
| Self-occupied, loan for repairs, or construction not finished in five years | ₹30,000 | Nil |
| Up to two self-occupied houses together | ₹2,00,000 combined | Nil |
| Let-out or deemed let-out house | Full interest | Full interest |
| Interest before possession | One fifth a year for five years, within the above limits | Same, for let-out houses |
Joint owners who are also co-borrowers can each claim up to their own limit, in proportion to their share of the loan.
Worked example: rental flat with a loan
Facts, FY 2025-26. Rohit lets out a flat for ₹25,000 a month and pays ₹12,000 property tax. Interest on the loan for the year is ₹1,80,000.
Gross annual value: ₹3,00,000. Less property tax: ₹2,88,000 net annual value. Less 30%, ₹86,400: ₹2,01,600. Less interest ₹1,80,000: income from house property ₹21,600.
Only ₹21,600 is added to his income, even though he received ₹3,00,000 in rent.
Self-occupied with pre-construction interest. Kavita paid ₹3,00,000 interest while her flat was being built and took possession in FY 2024-25. She gets ₹60,000 a year for five years from that year. In FY 2025-26 she paid ₹1,70,000 interest, so the total is ₹2,30,000, but the claim in the old regime stops at ₹2,00,000.
Home loan deduction in income tax: old vs new regime
The new regime removes the 24(b) claim for a home you live in. For a let-out home it keeps the interest deduction, but if interest makes the house property figure negative, that loss cannot be adjusted against salary or business income.
In the old regime, a house property loss can reduce other income by up to ₹2,00,000 a year, and the rest is carried forward for eight years to be set off against future house property income. This is often the single biggest reason a salaried borrower stays in the old regime. Test both choices in the regime calculator.
Claiming 24(b) in your return
- Get the interest certificate from your lender for the year, showing interest and principal separately.
- If salaried, give it to your employer with Form 12BB (Form 124 from tax year 2026-27) so TDS is lower.
- While filing your ITR on the e-filing portal, fill Schedule HP: type of property, rent, municipal tax, interest and lender details.
- For pre-construction interest, enter the one-fifth share plus the current year's interest.
- Check the house property figure against your Form 16 and AIS before you submit.
Section 24 after the Income-tax Act, 2025
| Item | FY 2025-26 | Tax year 2026-27 |
|---|---|---|
| Law | Sections 22 to 27, 1961 Act | House property chapter, 2025 Act |
| Standard deduction | 30% of net annual value | 30% of net annual value |
| Self-occupied interest limit | ₹2,00,000, old regime | ₹2,00,000, old regime |
| Interest before completion | Five equal parts | Five equal parts |
Rent for March received in April still belongs to the year it relates to, so check which year an item falls in when you file across the switch.
Home loan interest errors
| Mistake | Correction |
|---|---|
| Claiming ₹2 lakh for a self-occupied home in the new regime | Not allowed; choose the old regime or drop the claim |
| Claiming the 30% deduction on a self-occupied home | The 30% applies only where there is rental value |
| Adding processing fees and prepayment charges as interest | Only interest on the loan is allowed |
| Claiming the whole loan when a co-owner pays half | Each co-borrower claims their share |
This is a general explanation of home loan interest rules, not advice on your property or loan. Rules and limits may change, so recheck figures before you claim, using the e-filing portal or a qualified chartered accountant.
Sources we checked
- Income-tax Act, 1961, sections 22 to 24
- Income-tax Act, 1961, section 71
- Income-tax Act, 1961, section 115BAC
Frequently asked questions
What is the home loan interest limit under section 24 b of income tax act?
For a self-occupied home, ₹2,00,000 a year in the old regime. If the loan is for repairs or the house is not built within five years, the limit is ₹30,000. A let-out house has no cap.
How is income tax on rental income calculated in India?
Take rent received, subtract municipal tax paid, then subtract 30% of the balance and any home loan interest. What is left is added to your income and taxed at slab rates.
Can I claim home loan interest in the new tax regime?
Only for a let-out house. A self-occupied home gets no interest deduction in the new regime, and a let-out loss cannot be set off against other income.
Can both husband and wife claim section 24b?
Yes, if both are co-owners and co-borrowers. Each can claim interest on their share, up to their own limit.
What does section 24 of income tax act cover?
Section 24 lists the deductions from house property income: 30% of net annual value under 24(a) and interest on borrowed money under 24(b).