Quick answer: From tax year 2026-27 the new Income-tax Act, 2025 applies. Under the old regime, a home loan still gives you up to ₹2 lakh a year on interest for a self-occupied home (section 22, formerly 24(b)) and up to ₹1.5 lakh on principal, stamp duty and registration (section 123, formerly 80C). Under the new regime (section 202, the default) a self-occupied home gets neither; only interest on a let-out home is deductible, against its rent.
By Vijay Arjun V (B.Pharm, PGDM), authorised LIC HFL DSA since 2002. Updated 9 October 2026.
This guide replaces our 2025 version. The deductions themselves have not changed much; the section numbers have, because the Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. If you read “24(b)” or “80C” elsewhere, the table below maps them.
Which home loan deductions can you claim in 2026-27?
| What you pay | New section (old) | Limit | Old regime | New regime |
|---|---|---|---|---|
| Interest on a self-occupied home | 22 (24(b)) | ₹2 lakh a year | Yes | No |
| Interest on a let-out home | 22 (24(b)) | No cap against rent | Yes | Yes |
| Principal repayment | 123 (80C) | ₹1.5 lakh, shared with PF, LIC premium etc. | Yes | No |
| Stamp duty and registration, in the year paid | 123 (80C) | Within the same ₹1.5 lakh | Yes | No |
| Interest on pre-construction period | 22 | Claimed in 5 equal parts from the year of possession, within the ₹2 lakh | Yes | No |
| Extra interest for affordable homes | 131 (80EEA) | Only loans sanctioned 1 April 2019 – 31 March 2022 | Yes | No |
How does the ₹2 lakh interest deduction work?
- It applies to interest on a loan for buying or building the home you live in.
- Construction must be completed within five years from the end of the tax year in which you took the loan; otherwise the cap drops to ₹30,000.
- You need an interest certificate from the lender. LIC HFL issues a provisional and a final certificate each year, which you can download from its customer portal or ask us for.
- No deduction while the flat is under construction. Interest paid before possession (pre-EMI) is added up and claimed in five equal parts starting the year you get possession, still within the ₹2 lakh limit.
What counts under section 123 (the old 80C)?
- The principal portion of your EMIs.
- Stamp duty and registration charges, in the year you pay them. In Telangana that is about 7.5% of the property value (see hidden costs of buying a flat), so for many buyers this alone fills the ₹1.5 lakh limit in the year of purchase.
- The ₹1.5 lakh limit is shared with PF, PPF, life insurance premiums and children’s tuition fees.
- If you sell the home within five years of the end of the tax year you bought it in, the principal deductions you claimed are added back to your income in the year of sale.
Can both spouses claim on a joint home loan?
Yes, under the old regime. Each of you must be a co-owner of the property and a co-borrower on the loan, and each must actually pay towards the EMI. Then each can claim up to ₹2 lakh of interest and ₹1.5 lakh of principal, in the ratio of ownership. Each person chooses a regime separately, so if one spouse is on the new regime, only the other claims. LIC HFL encourages an earning spouse as co-applicant anyway, because it raises the loan you can get (see eligibility by salary).
Old or new regime: which is better with a home loan?
It depends on your income and your other deductions. As a rule of thumb, the old regime tends to win when your home loan interest plus section 123 items and other deductions are large, typically in the early years of a big loan. The new regime has lower rates and no paperwork, and it often wins for smaller loans or once interest falls. Ask your tax adviser to run both for your numbers; you can usually switch each year if you have no business income.
What about a let-out or second home?
- Interest on a let-out home is deducted from its rent, with no ₹2 lakh cap, under both regimes. You also deduct 30% of the net annual value as a standard deduction.
- Under the old regime, a resulting loss can be set off against salary and other income up to ₹2 lakh a year, and the rest carried forward for eight years.
- Under the new regime, a loss from house property cannot be set off against other income or carried forward.
- You can treat up to two homes as self-occupied; the ₹2 lakh interest cap covers both together.
Does a plot loan or top-up loan give tax benefits?
A plot loan alone gives no deduction, because there is no house yet. Once you build, the interest paid on the plot and construction loans is generally claimed like pre-construction interest, from the year construction is complete. See plot loan vs flat loan. A top-up loan qualifies only if you can show it was used for buying, building, repairing or extending the home, and repair or renovation interest is capped at ₹30,000 within the ₹2 lakh. More in LIC HFL top-up loans.
Buying with your spouse? See joint home loan with spouse at LIC HFL for the rate, eligibility and tax benefits of applying together.
Frequently asked questions
Is a home loan tax benefit available under the new regime?
Only for a let-out property, where interest is deducted from rent. A self-occupied home gets no interest or principal deduction under the new regime.
Can NRIs claim these deductions?
Yes, against income taxable in India, such as rent from the Hyderabad property, under the old regime. See NRI buying property in Hyderabad.
Can I claim if the property is in my name but my parent pays the EMI?
Generally no. You must be the owner and a borrower and pay the EMI from your own funds.
Where do I get my LIC HFL interest certificate?
From the LIC HFL customer portal or app using your loan account number, or ask us and we will request it for you. See how to check your LIC HFL loan status.
This is general information, not tax advice. Tax rules depend on your circumstances; confirm with a chartered accountant before filing. Sources: Income-tax Act, 2025 (sections 22, 123, 131, 202) as published, and mappings to the Income-tax Act, 1961 in published tax summaries; checked 9 October 2026.
Hyderabad Home Loans is run by Elite Financial Services, an authorised Direct Selling Agent (DSA) of LIC Housing Finance Ltd. We are not LIC HFL. Loans are sanctioned solely at LIC HFL’s discretion; rates and fees may change.