Home Loan Tax Benefit Calculator
Interest and principal by year, the deductions they give, and the tax saved per regime.
Sections 22 and 123 Income-tax Act, 2025 from 2026-27 (24(b) and 80C before) · Sources
Interest and principal by year (your share)
Deductions and tax saved, year by year
Rules used and official sources
Tax rules and rates change. This calculator follows the rules described on this page and may not cover every situation. Check the official source or a qualified tax professional before filing or invoicing.
About the Home Loan Tax Benefit Calculator
A home loan can cut your income tax in two ways: the interest is deducted from income from house property, and the principal counts towards the ₹1.5 lakh deduction for investments. How much you save depends on whether you live in the house or let it out, when it was completed, your share of the loan — and your tax regime, because the new regime gives almost nothing for a home you live in.
This calculator builds the EMI schedule, splits every financial year into interest and principal, spreads pre-construction interest over five years, applies the ₹2 lakh cap for a self-occupied home (or the set-off and carry-forward rules for a let-out one), adds the principal and stamp duty within section 123 (80C), and compares your tax with and without the loan under both regimes, year by year. Rules are those of the Income-tax Act, 2025 (sections 22, 109, 123, 130, 131 and 202), which kept the 1961 Act’s limits.
How to use it
- Enter the loan amount, interest rate, tenure and the month of the first EMI, and your share if you borrowed jointly.
- Say whether you live in the house or let it out (with the rent and municipal tax), and the month you got possession or the construction was completed. Add any pre-EMI interest paid during construction.
- Tick the boxes that apply: a repair loan or late completion (₹30,000 limit), a lender that qualifies for the principal deduction, and a first-home deduction under section 131 or 130 if your loan meets their conditions.
- Enter your income apart from the house, your other section 123 (80C) payments and other old-regime deductions, so the tax saved is worked out at your slab.
- Pick the year to show. Read the deductions and the tax saved in each regime, the year-by-year table and the chart; copy the summary or download the table as CSV.
Examples
First EMI April 2026 · other section 123 payments ₹50,000 · other deductions ₹25,000
2026-27: interest ₹4,21,182, principal ₹99,511 · old regime: ₹2,00,000 interest + ₹99,511 principal deducted → ₹93,450 saved · new regime: nothing saved
Even so, the new regime’s tax (₹1,92,400) is lower than the old regime’s with the loan (₹2,96,550) at this income.
First EMI and possession April 2026 · municipal tax ₹10,000 a year · no other section 123 payments or deductions
2026-27: rent less municipal tax ₹2,90,000, less 30%, less interest ₹3,54,634 = a loss of ₹1,51,634 · old regime saves ₹1,51,900; new regime saves ₹33,120 and the rest of the loss lapses
₹50 lakh at 8.5% for 20 years · self-occupied
₹8,83,569 of pre-construction interest, deducted at ₹1,76,714 a year from 2026-27 to 2030-31 — within the ₹2 lakh cap together with the year’s own interest
The deductions, regime by regime
Interest — section 22 (24(b) of the 1961 Act). For a house you live in (or cannot occupy because you work elsewhere), interest is deductible up to ₹2,00,000 a year for up to two such houses together — or ₹30,000 if the loan is for repairs or the house was not bought or built within five years from the end of the year in which you borrowed (section 22(2)). For a let-out house all the interest is deductible, after 30% of the rent less municipal tax.
Pre-construction interest — section 22(1)(c). Interest for the years before the house is completed is deducted in five equal parts, from the year of completion.
Principal, stamp duty and registration — section 123 with Schedule XV (80C). Within the ₹1,50,000 limit shared with PF, PPF, ELSS, insurance and tuition fees. The principal counts only if the lender is a bank, co-operative bank, LIC, National Housing Bank, a housing finance company, the government or certain employers; a house sold within five years from the end of the year of possession reverses these deductions.
New regime (section 202). No interest deduction for a self-occupied house, no section 123, and a loss from house property cannot be set off against salary or carried forward — so only a let-out house gives a benefit, by cancelling the taxable rent.
Let-out losses, joint loans and first-home extras
In the old regime a house-property loss is set off against other income up to ₹2,00,000 a year (section 109(1)(b); 71(3A)); the rest is carried forward for eight years and set off only against income from house property (section 110; 71B). Each co-owner who is also a co-borrower claims their own share of the interest and principal within their own limits — two co-owners of a self-occupied home can each deduct up to ₹2,00,000 of interest.
Two older schemes still run for loans that qualified: section 131 (80EEA) — up to ₹1,50,000 of extra interest for loans sanctioned from 1 April 2019 to 31 March 2022, for a house with a stamp duty value of up to ₹45 lakh, if you owned no other house — and section 130 (80EE) — up to ₹50,000 for loans of up to ₹35 lakh sanctioned in 2016-17. Both are old-regime deductions, for interest not already deducted under section 22.
How the figures are worked out
EMIs are at a fixed rate on the reducing balance, monthly (rate ÷ 12), as lenders calculate them, and each EMI falls in the financial year of its month. Your share of the loan applies to the interest, principal and rent. Tax is worked out with the slabs, rebate and 4% cess for 2026-27 on your income with and without the loan’s deductions, for each regime separately; the saving in a year is the difference. Sources: Income-tax Act, 2025 sections 21, 22, 109, 110, 123 with Schedule XV, 130, 131 and 202, and the Finance Act, 2026.
Limitations
- Assumes a fixed interest rate, no prepayments, the same income every year and today’s tax rates. If your rate or EMI changes, use the interest and principal from your lender’s certificate for that year.
- The ₹2 lakh cap is applied to the year’s interest and the pre-construction instalment together, as under the 1961 Act. The 2025 Act’s section 22(2) names only section 22(1)(b); until the forms or the CBDT settle it, check with a tax professional before claiming more.
- For a let-out house the rent is assumed to be received for every month from possession, and its annual value is taken as the rent; a higher fair rent, vacancy or unrealised rent are not modelled.
- Only one house is modelled. With two self-occupied houses, the ₹2 lakh cap is for both together; with other let-out houses, their income and losses are combined.
- Income other than the house is treated as salary or business income at slab rates; capital gains and other special-rate income are not included.
Privacy
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Frequently asked questions
Can I claim home loan interest in the new tax regime?
Not for a house you live in: section 202(2) of the Income-tax Act, 2025 (115BAC of the 1961 Act) removes that deduction, and section 123 (80C) for the principal. For a let-out house the interest is still deducted from the rent, but any loss left over cannot be set off against your salary or carried forward.
How much home loan interest can I deduct?
Up to ₹2,00,000 a year for a self-occupied house in the old regime (₹30,000 for repair loans or late completion). For a let-out house there is no cap on the interest itself, but a loss can reduce your other income by only ₹2,00,000 a year; the rest is carried forward for eight years.
Can both joint borrowers claim the deduction?
Yes, if each is a co-owner of the house and pays their share of the EMIs. Each claims their own share of the interest and principal, within their own ₹2,00,000 and ₹1,50,000 limits.
What is pre-construction interest and when can I claim it?
Interest you pay before the house is completed — including pre-EMI interest on the amount disbursed. It is added up to the 31 March before the year of completion and deducted in five equal parts, starting in that year, within the ₹2 lakh cap for a self-occupied house.
Does the principal count before I get possession?
Generally no. The section 123 (80C) deduction is for a house whose income is chargeable under “Income from house property”, so principal repaid during construction is not claimed. The interest for that period is not lost: it becomes pre-construction interest.
Is the home loan benefit enough to make the old regime better?
Often not by itself. With ₹20 lakh of salary, a ₹50 lakh loan and ₹75,000 of other deductions, the old regime still costs about ₹1 lakh more than the new one in 2026-27. Compare the tax under both regimes, which this calculator shows, or use the income tax calculator for your whole return.