Deductions & Salary

House property income and home loan interest

1 min read Updated 03 Oct 2026 2 views

AI summary

How rent is taxed, the 30% standard deduction, and the ₹2 lakh interest limit.

3 sections 5 steps

Gross annual value: rent received or receivable (nil for up to two self-occupied houses).
Less municipal taxes paid.
= Net annual value.
Less 30% standard deduction (for repairs, whatever you actually spend).
Less interest on home loan.

House	Old regime	New regime
Self-occupied (up to 2)	Up to ₹2 lakh a year	Not allowed
Let out	Full interest, but loss set-off against other income capped at ₹2 lakh	Allowed against its rent; loss can't be set off against other income

Pre-construction interest is claimed in five equal parts starting from the year construction is completed.
The ₹2 lakh self-occupied limit applies only if construction is finished within 5 years from the end of the year of borrowing; otherwise ₹30,000.
Principal repayment comes under section 123 (80C) in the old regime.

Each co-owner who is also a co-borrower can claim their own ₹2 lakh interest and ₹1.5 lakh principal limit.

Sources

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