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Home loan tax benefit calculator

  

Old tax regime only, for a self-occupied house. The new regime does not allow these deductions. Principal falls under the ₹1.5 lakh Section 80C limit, shared with PPF, EPF, life insurance and others. Interest is allowed up to ₹2 lakh under Section 24(b). Let-out property has different rules.

1.8 lakh

3.5 lakh

50 thousandEPF, PPF, ELSS, life insurance premium and so on.

%

Tax you save in a year

₹93,600

Deductions of ₹3,00,000 at 30% plus 4% cess.

Principal deduction (80C)
₹1,00,000
Interest deduction (24b)
₹2,00,000
Interest not allowed
₹1,50,000

Making the most of the home loan deduction

A home loan gives you two tax breaks, and they come from different places in the law. Interest comes under section 24(b), up to ₹2 lakh in a year for a house you live in. Principal comes under section 80C, up to ₹1.5 lakh, shared with other 80C investments.

Say you repay ₹1.8 lakh of principal and ₹3.5 lakh of interest in a year, and you already put ₹50,000 into other 80C items such as EPF. The 80C room left is ₹1 lakh, so only ₹1 lakh of principal counts. Interest is capped at ₹2 lakh, so ₹1.5 lakh of interest gets no deduction. The deduction is ₹3 lakh, and at the 30% slab with 4% cess you save ₹93,600 in tax.

Two points to remember. First, the old regime is required. Many people on the new regime lose this benefit, so run both. Second, a joint loan lets each owner claim separately, which can double the limits if both repay and both own the property.

Interest for the period before you got possession, the pre-construction interest, can be claimed in five equal parts after possession, within the same ₹2 lakh limit overall.

Sources

What this calculator does not account for

  • The new tax regime, which does not allow these deductions.
  • Let-out and under-construction property rules.
  • Other 80C items beyond the amount you enter.

How this is calculated

Formula: Deduction and tax saved

saving =(principal up to ₹1.5 lakh + interest up to ₹2 lakh) × slab × 1.04

What the symbols mean

  • 80CPrincipal repaid, within the ₹1.5 lakh limit shared with other 80C items.
  • 24(b)Interest on a self-occupied home, up to ₹2 lakh.

Good to know

  • Only the old regime allows these. The new regime does not.
  • Estimate the tax itself using the income tax calculator.

Read the full methodologyFound an error? Contact us

Worked examples

Each example is worked out by the same code as the calculator above.

₹1.8 lakh principal, ₹3.5 lakh interest, ₹50,000 other 80C, 30% slab

80C: ₹1,00,000. 24(b): ₹2,00,000. Total ₹3,00,000. Tax saved ₹93,600. ₹1.5 lakh of interest is above the limit.

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Questions

How much interest can I claim?

Up to ₹2 lakh a year under section 24(b) for a self-occupied house, in the old regime.

Is the principal claim separate?

Principal repaid falls under section 80C. The ₹1.5 lakh limit is shared with PPF, EPF, life insurance premiums and ELSS.

What about stamp duty?

Stamp duty and registration are also eligible under 80C in the year you pay them, within the same limit.

Does the new tax regime allow it?

No. In the new regime you give up almost all deductions, so compare both before choosing.