Home Loan Tax Benefits 2025: Section 24 is Now 22
- Section 24 (interest up to Rs 2 lakh) renumbered to Section 22 under the new Act. Substance unchanged.
- Section 80C principal repayment renumbered to Section 123. Same Rs 1.5 lakh ceiling shared with PPF, ELSS, etc.
- Section 80EEA (additional Rs 1.5 lakh for affordable housing) is now Section 131.
- Joint home loans still allow each co-borrower to claim Section 22 (Rs 2L) and Section 123 (Rs 1.5L) separately.
Home loans offer two tax benefits: a deduction on interest paid (old Section 24, now Section 22) and a deduction on principal repayment (old Section 80C, now Section 123). Both continue under the Income Tax Act 2025 with the same limits.
Section Mapping: Old to New
Interest Deduction: New Section 22 (Old Section 24)
Self-Occupied Property
- Interest deduction up to Rs 2,00,000 per year under the old tax regime
- Available only for loans taken for purchase, construction, or renovation
- The property must be self-occupied (not rented out)
- Not available under the new tax regime (Section 202)
Let-Out (Rented) Property
- No upper limit on interest deduction against rental income
- The entire interest amount is deductible from rental income
- Available under both old and new tax regimes
- Net loss from house property (after interest deduction) can be set off against salary income up to Rs 2 lakh per year
Principal Repayment: New Section 123 (Old Section 80C)
- Home loan principal repayment qualifies under the overall Rs 1,50,000 limit of Section 123
- This limit is shared with PPF, ELSS, LIC, NSC, and other eligible investments
- Available only under the old tax regime
- Stamp duty and registration charges on property purchase also qualify under Section 123 (in the year of payment only)
Pre-Construction Interest
- Interest paid during the construction period (from loan date to March 31 before completion year) is deductible
- Claimed in five equal annual instalments starting from the year of completion
- This provision continues unchanged under the new act
Joint Home Loans: Double the Benefit
If two co-borrowers are also co-owners of the property, each can claim separately:
- Interest deduction up to Rs 2 lakh each (total Rs 4 lakh for a couple)
- Principal repayment under Section 123 up to Rs 1.5 lakh each
- Both must be co-owners with defined share in the property
- EMI payments should ideally come from separate bank accounts for clean documentation
Pay EMIs from separate bank accounts. Get the property registered with both names and defined ownership share. Without these, the AO can disallow the doubled deduction during scrutiny.
What You Need to Do
Nothing changes in your home loan tax claims. Deduction amounts, limits, and eligibility remain identical. Only the section numbers change, and your CA or tax software will handle the transition automatically from FY 2026-27. Use our section mapping tool to find the new section numbers for all home loan deductions.
Frequently Asked Questions
What is the maximum home loan interest deduction?
For self-occupied property under the old regime, maximum interest deduction is Rs 2 lakh per year under Section 22 (old Section 24). For rented property, there is no upper limit, the entire interest is deductible against rental income.
Can both husband and wife claim home loan tax benefit?
Yes, if both are co-borrowers and co-owners. Each can claim up to Rs 2 lakh interest deduction and Rs 1.5 lakh principal under Section 123, effectively doubling the benefit.
Is home loan interest deduction available in the new tax regime?
For self-occupied property, no. For let-out (rented) property, interest can be set off against rental income even under the new regime, with the Rs 2 lakh house property loss set-off cap.
What is the new section number for home loan interest deduction?
Section 24 (home loan interest) is now Section 22 under the Income Tax Act 2025. Section 80C (principal repayment) is now Section 123. Section 80EEA (affordable housing extra) is now Section 131.
For the full Section 80C / 123 picture (PPF, ELSS, LIC, NSC, the Rs 1.5 lakh ceiling), read our Section 80C under the new Act. For the new vs old regime trade-off, see new regime vs old regime.
Disclaimer: This article provides general information about the Income Tax Act 2025 and is not tax advice. Consult a qualified Chartered Accountant for advice specific to your situation.
Need Help Maximizing Home Loan Benefits?
Our CA team can review your home loan structure and ensure you claim every available deduction.