Home Loan Tax Benefit: Old vs New Regime and Joint Loans

If you are buying a flat in Delhi NCR with a loan, the home loan tax benefit can look like a big saving. Whether you actually get it depends on three things: which tax regime you choose, how the property is used, and who owns and repays the loan. This guide covers the rules as they stand on 20 October 2026, with worked numbers.

Tax rules change, usually at the Union Budget. Treat the figures below as a guide and confirm them with a chartered accountant before you file.

What changed in 2026: new Act, new section numbers

The Income-tax Act, 2025 took effect on 1 April 2026 and renumbered the home loan provisions. In the new Act, interest on a home loan is under Section 22 (earlier Section 24(b)), and the choice of tax regime is under Section 202 (earlier Section 115BAC). Principal repayment, earlier under Section 80C, now sits under Section 123.

Reports say the Budget in February 2026 did not change the slabs, the rebate or the deduction limits. So the benefit is the same one you may have read about before. Only the section numbers differ. This article uses the familiar names (24(b), 80C) and shows the new numbers where they matter.

Home loan tax benefit at a glance: old vs new regime

The extra first-time-buyer deductions, Sections 80EE and 80EEA, are closed to new borrowers. 80EEA covered loans sanctioned between 1 April 2019 and 31 March 2022. 80EE’s window closed in March 2017.

Section 24(b) / Section 22: the interest deduction

Interest on a loan taken to buy, build, repair or rebuild a home is deducted while computing “income from house property”. For a self-occupied home, the cap is ₹2 lakh a year, but only if three conditions are met:

• The loan was taken to buy or build the property.
• Construction or purchase is completed within five years from the end of the year in which you borrowed.
• You hold a certificate from the lender stating the interest payable.

If the five-year condition is missed, or the loan is for repairs or renovation, the cap falls to ₹30,000. This matters in NCR, where possession can run late.

You can treat up to two homes as self-occupied. The ₹2 lakh cap is shared across both, not given per house.

Example: self-occupied flat in Noida

Say your interest for the year is ₹2.8 lakh. Only ₹2 lakh is deductible under the old regime. Your house property income is a loss of ₹2 lakh, which reduces your taxable salary. The extra ₹80,000 of interest gives no tax benefit.

Let-out and deemed let-out homes

For a rented flat, the rent is taxable. You get a 30% standard deduction on the annual value (after municipal taxes), and you can deduct the entire interest with no ₹2 lakh ceiling.

A home that is not self-occupied and is not rented is generally treated as deemed let-out, with the same no-cap interest rule. Ask your CA how this applies to a third property.

Example: rented flat in Gurugram

Rent is ₹25,000 a month, so annual rent is ₹3,00,000. Assume no municipal tax. Interest paid is ₹4,50,000.

• 30% standard deduction: ₹90,000
• Interest: ₹4,50,000
• House property income: ₹3,00,000 − ₹90,000 − ₹4,50,000 = a loss of ₹2,40,000

Under the old regime, up to ₹2 lakh of this loss can be set off against salary. The remaining ₹40,000 can be carried forward for up to eight years against house property income. Under the new regime, the loss cannot be set off against salary. Sources disagree on whether it can be carried forward under the new regime, so confirm this with your CA.

Section 80C: principal and stamp duty

The principal part of your EMI qualifies under 80C, but the limit is ₹1.5 lakh a year shared with everything else: EPF, life insurance, ELSS and so on. Many salaried people already use up this limit, so the home loan principal may add little.

Stamp duty and registration charges also count under 80C, but only in the year you pay them.

Two rules catch buyers out:

• No 80C during construction. The principal deduction starts only after the home is complete and in your name.
• Five-year clawback. If you sell within five years of the end of the year you got possession, the 80C deductions you took are added back to your income in the year of sale. Interest deductions are not reversed.

Buying an under-construction home in NCR

If you pay interest before you get the keys, you cannot deduct it year by year. Instead, the pre-construction interest is added up and claimed in five equal instalments, starting in the year the property is completed. For a self-occupied home, these instalments still sit inside the ₹2 lakh annual cap.

Example: pre-construction interest

You accumulate ₹3 lakh of pre-construction interest. That is ₹60,000 a year for five years from completion. If the current year’s interest is ₹1.8 lakh, the total is ₹2.4 lakh. You can claim only ₹2 lakh.

Keep every lender interest certificate from day one, including the construction period. If you are comparing launches, the ADiHomes projects page lets you filter by city and builder. You can also read the Noida guide or the Gurugram guide for locality context. Check the stated possession timeline against the five-year condition above.

Choosing between the old and new regime

The new regime has lower rates and a bigger rebate, but almost no deductions. For FY 2026-27 its slabs are:

The old regime (below age 60) taxes income above ₹2.5 lakh at 5% up to ₹5 lakh, 20% up to ₹10 lakh, and 30% above that. Add 4% cess in both regimes. In the new regime, taxable income up to ₹12 lakh pays no tax because of the rebate. A salaried person with a gross salary of about ₹12.75 lakh can therefore pay nothing, so a home loan deduction would add nothing for you.

Worked example: ₹20 lakh salary, self-occupied flat, sole borrower

Assume interest of ₹2.8 lakh, 80C fully used (home loan principal plus other items), no other deductions, and no surcharge.

Here the new regime is cheaper by about ₹96,000, even though the old regime lets you claim ₹3.5 lakh for the home loan.

The break-even point

Using the same slabs, we worked out how much total deduction, beyond the standard deduction, the old regime needs to match the new one. This is illustrative: salaried, below 60, no surcharge, no other income.

At ₹15 lakh, the home loan alone (₹2 lakh interest plus ₹1.5 lakh principal) gives ₹3.5 lakh. You would need roughly ₹1.94 lakh more from HRA, health insurance, NPS or similar to break even. If you do not have that, the new regime is likely cheaper.

How and when to choose

• The new regime is the default. Without instructions, your employer deducts TDS under it.
• Salaried people without business income can pick a regime each year. Your final choice is made when you file your return.
• People with business or professional income can move to the old regime only once, using Form 10-IEA.
• The Income-tax department says the old regime must be chosen before the return’s due date. A late return defaults to the new regime.

Joint home loans: how co-borrowers split the claims

A joint loan can raise your combined home loan tax benefit, because each eligible person has their own limits. Under the old regime, each co-owner who is also a co-borrower can claim up to ₹2 lakh of interest on a self-occupied home. Each can also claim principal under their own 80C limit.

The conditions are strict:

• You must be both a co-owner and a co-borrower. A co-owner who is not on the loan gets no home loan deduction. A co-borrower who is not on the sale deed is on weak ground.
• Claims follow your share. Sources describe the split as based on ownership share, actual repayment, or both. Make your ownership percentage and repayment pattern line up, and write the shares into the deed. An undefined share is generally treated as equal.
• You need taxable income. A deduction is useful only if you have income to set it against.
• Each person picks their own regime. If one partner is on the new regime, that partner gets no self-occupied interest or 80C deduction.

Remember the downside too: every co-borrower is liable for the whole loan, not just their share.

Example: couple with 60:40 ownership

Annual interest is ₹5 lakh, and both are on the old regime. The 60% owner’s share is ₹3 lakh, but the cap limits the claim to ₹2 lakh. The 40% owner’s share is ₹2 lakh, so the claim is ₹2 lakh. Together they claim ₹4 lakh, against ₹2 lakh for a sole borrower.

If both are in the 30% bracket, the extra ₹2 lakh of deduction saves about ₹62,400 with cess. That figure disappears if either partner is on the new regime. A sharper split can fill both caps, for example 50:50 on a ₹4 lakh interest bill.

Do the same regime comparison for each partner separately. One may do better on the old regime while the other prefers the new.

A quick checklist before you file

1. Get the lender’s annual certificate showing interest and principal paid.
2. Confirm the property is in your name (or names) and that your share is documented.
3. Check the five-year completion condition for the ₹2 lakh cap.
4. Compare tax under both regimes for each earner, not for the household.
5. Tell your employer your regime choice early in the year, but re-check it before filing.
6. If you plan to sell within five years of possession, factor in the 80C add-back.

If you are still shortlisting homes, you can browse new projects in Greater Noida West or use the all-projects page to compare locations and timelines. This article is general information, not tax advice.

Frequently asked questions

Sources

• Home Loan Tax Benefit in 2026: What the New Tax Act Changes (Indiprop)
• Home Loan Tax Benefit: Old vs New Tax Regime (FY 2026-27) (Prateek Properties)
• Section 22, Income-tax Act 2025: Deductions from income from house property (ComplyBuddy)
• Income from House Property under Income-tax Act, 2025: Sections 20 to 24 (TaxGuru)
• Income from house property (Income Tax Department)
• Home Loan Interest Deduction Under Section 22 of the Income Tax Act 2025 (Fiscal Zenith)
• Home Loan Interest Deduction: Section 22 Rules Explained (TaxBizMantra)
• Tax Benefit on Home Loan Interest & Principle F.Y. 2025-26 (SAG Infotech)
• Home Loan Tax Benefits (2026) (Ujjivan Small Finance Bank)
• Home Loan Tax Benefits FY 2025-26: Sec 24(b), 80C, 80EEA (Toolisky)
• Home Loan Tax Benefits in India (FY 2025–26) (Finnovate)
• Income Tax Slabs for FY 2026-27: New and Old Tax Regime (Bajaj Finserv)
• Income Tax Slabs AY 2026-27 (FY 2025-26) — New & Old Regime (Indian Pay Calculator)
• Income Tax Slabs FY 2026-27: New vs Old Regime Rates (TaxSetu)
• Can you switch between old and new tax regime (1 Finance)

Updated 20 October 2026. This article is general information, not legal or financial advice; check current rules and project details before you decide.