Section 24(b) of the Income Tax Act lets you claim a deduction on the interest paid on a home loan, up to ₹2 lakh a year for a self-occupied property, with no upper cap at all if the property is let out. It’s one of the most valuable deductions available to homeowners, and one of the most misunderstood, especially now that the rules differ sharply between the Old and New Tax Regimes.
A note on section numbers: under the Income Tax Act, 2025, effective April 1, 2026, Section 24 has been renumbered as Section 22, with the home loan interest deduction specifically now sitting under Section 22(2). Section 24(a), the flat 30% standard deduction on rental income, corresponds to Section 22(1). Don’t be surprised if your CA or a return filed for Tax Year 2026-27 onward refers to “Section 22(2)” rather than “Section 24(b)”, it’s the same benefit, just under its new address. This guide uses “Section 24(b)” throughout, since it remains the term most people search for and recognise.
What Does Section 24(b) Actually Cover?
Section 24 deals with deductions from “Income from House Property,” and it has two parts. Section 24(a) gives a flat 30% standard deduction on rental income, regardless of your actual expenses. On the other hand, Section 24(b), the one most homeowners actually care about, lets you deduct the interest paid on a loan taken to purchase, construct, repair, or reconstruct a residential property.
Section 24(b) Deduction Limits
- Self-occupied property: Up to ₹2,00,000 a year in home loan interest, available only under the Old Tax Regime.
- Let-out property: The full interest amount is deductible, with no upper cap, in both the Old and New Tax Regimes.
This asymmetry between self-occupied and let-out properties is the single most important thing to understand about this section.
Is Section 24(b) Available Under the New Tax Regime?
This is where most of the confusion happens, and it’s worth being precise:
- Self-occupied property: Not available at all under the New Tax Regime. You lose this deduction entirely if you choose the new regime and live in the property yourself.
- Let-out property: The interest deduction remains available against your rental income, even under the New Tax Regime. However, if your interest expense exceeds your rental income and creates a loss, the New Tax Regime does not allow you to set off that loss against your salary or other income, unlike the Old Regime, which does.
In practice, this means a large home loan on a self-occupied property is one of the more common reasons people find the Old Tax Regime still works out better for them overall, despite its higher tax slabs.
How Pre-Construction Interest Works
If your property was under construction when you took the loan, you cannot claim the interest paid during that period in the years it was actually paid. Instead, the total pre-construction interest is added up and claimed in five equal instalments, starting from the financial year the construction is completed, alongside your regular annual interest for that year. The combined total still cannot exceed the ₹2 lakh cap for a self-occupied property.
Related Sections: 80C, 80EE, and 80EEA
A few related provisions often get confused with Section 24(b), since they all relate to home loans but cover different things:
- Section 80C (renamed to Section 123): Covers the principal repayment portion of your home loan EMI, up to ₹1.5 lakh, entirely separate from the interest covered under 24(b).
- Section 80EE and Section 80EEA (renamed to Sections 130 and 131 respectively): Provide an additional interest deduction on top of the ₹2 lakh Section 24(b) limit, but both are closed to new loans now. They only apply if you’re still repaying a loan sanctioned within their original eligibility windows (80EE: April 2016-March 2017; 80EEA: April 2019-March 2022, subject to property value conditions).
Who Can Claim Section 24(b)?
Both individuals and Hindu Undivided Families (HUFs) can claim this deduction. If a property is co-owned and the co-owners are also co-borrowers on the loan, each can claim the deduction separately, based on their share of ownership and loan repayment, up to the applicable cap for each individual.
A Worked Example
Rajesh took a ₹30 lakh home loan and pays approximately ₹2.4 lakh in interest for the year on his self-occupied home. Under the Old Tax Regime, he can only claim ₹2,00,000 of this, the excess ₹40,000 isn’t deductible under Section 24(b). If Rajesh had chosen the New Tax Regime instead, he couldn’t claim any of this interest against his self-occupied property, though he’d benefit from the New Regime’s higher ₹75,000 standard deduction and more favourable slab rates instead.
Frequently Asked Questions
What is the maximum deduction under Section 24(b)?
₹2,00,000 a year for a self-occupied property, under the Old Tax Regime only. There’s no upper cap for a let-out property, in either regime.
Is Section 24(b) available under the New Tax Regime?
Not for a self-occupied property, that benefit is lost entirely under the new regime. For a let-out property, the interest deduction remains available, but any resulting loss cannot be set off against salary or other income under the New Regime.
Has Section 24(b) been renamed?
Yes. Under the Income Tax Act, 2025, effective April 1, 2026, it’s now Section 22(2). The deduction itself and its ₹2 lakh cap are unchanged, only the section reference has changed.
Can I claim interest paid during construction of my property?
Not in the years it was paid. Pre-construction interest is totalled and claimed in five equal instalments starting from the year construction is completed, combined with that year’s regular interest, subject to the overall ₹2 lakh cap for self-occupied property.
Can both co-owners claim Section 24(b) if they’re both on the loan?
Yes. If co-owners are also co-borrowers, each can claim the deduction separately based on their share of ownership and repayment, up to the ₹2 lakh cap per individual for a self-occupied property.
Are Section 80EE and 80EEA the same as Section 24(b)?
No. They’re separate, additional deductions on top of the ₹2 lakh Section 24(b) limit, but both are closed to new loans, only available if you’re still repaying a loan sanctioned within their original eligibility windows.
Is the ₹2 lakh limit different for a second home?
If both properties are self-occupied (or one is self-occupied and the other vacant), the ₹2 lakh limit applies collectively across both, not separately for each.
Last Updated on 2 hours ago by Team Paisaseekho
