Every rule of Section 24(b) for AY 2026-27 — the ₹2 lakh cap on self-occupied, the unlimited deduction on let-out (subject to ₹2L set-off cap), pre-construction interest spread over 5 years, joint ownership claims and worked examples.
For most Indians, a home loan is the single largest financial commitment of a lifetime — and Section 24(b) of the Income Tax Act is what makes it bearable from a tax standpoint. But every year, Taxpex CAs encounter taxpayers who claim Section 24(b) wrongly, lose the pre-construction benefit, or fail to optimise the joint-owner split. This guide is the most detailed, example-driven walkthrough of Section 24(b) for AY 2026-27 in plain English.
Section 24 of the Income Tax Act allows two deductions from 'Income from House Property':
| Aspect | Self-occupied | Let-out |
|---|---|---|
| GAV | Nil | Actual / fair rent |
| 30% standard deduction | Not applicable | Yes |
| Interest deduction cap | ₹2,00,000 | No cap |
| Set-off of loss vs other income | Allowed up to ₹2L | Allowed up to ₹2L |
| Carry-forward of loss | 8 years | 8 years |
| Available under new regime | No (for self-occupied) | Yes (interest u/s 24(b)) |
For a self-occupied property, interest u/s 24(b) is capped at ₹2,00,000 per year provided:
If the 5-year construction deadline is missed, deduction collapses to ₹30,000 — irrespective of actual interest paid.
For a let-out property, ALL the interest paid in the year is deductible from house-property income — there is no cap. However, the resulting loss that can be set off against other heads (salary, business, capital gains) in the SAME year is limited to ₹2,00,000. Any excess loss is carried forward for 8 assessment years, to be set off only against future house-property income.
Interest paid on a home loan BEFORE the property is completed is 'pre-construction interest'. It is NOT deductible in the year of payment. Instead, it accumulates and is allowed in 5 equal annual instalments starting from the year construction is completed.
Loan disbursed Apr-2023. Interest paid: ₹1.5L (FY 23-24) + ₹1.8L (FY 24-25) = ₹3.3L. Construction completed May-2025. From FY 25-26 onwards, claim ₹3.3L / 5 = ₹66,000 per year for 5 years AS pre-construction interest, PLUS the current-year interest — total subject to the ₹2L cap (if self-occupied).
Both spouses (or any two co-buyers) can independently claim Section 24(b) deduction up to ₹2L each — provided ALL these conditions are met:
Merely adding a spouse as 'co-applicant' without ownership in the deed disqualifies them from 24(b).
Deduction ₹2,00,000 (capped). Loss ₹2L set off against salary.
Full ₹1,40,000 deductible.
NAV = 3.4L. Std deduction 30% = 1.02L. Interest 4L. HP loss = 1.62L. Set off fully against salary.
HP loss ≈ 3.5L. Only ₹2L set off against salary; ₹1.5L carried forward 8 years.
Each claims ₹1.5L (within ₹2L cap each).
Only the borrower spouse claims; capped at ₹2L.
Claim ₹60,000/year for 5 years from FY 25-26.
Deduction collapses to ₹30,000.
From FY 19-20 onwards, taxpayer can elect TWO self-occupied properties (combined ₹2L cap). Third onwards = deemed let-out.
Interest paid = pre-construction; claim later in 5 instalments.
Interest paid to BOTH lenders during the year is deductible; obtain interest certificates from both.
Interest IS eligible, provided lender issues a certificate and reports the interest as income.
Claim ₹2L u/s 24(b) + ₹1.2L u/s 80EEA. Total ₹3.2L.
Each co-borrower (if eligible) can claim 80EEA separately — verify stamp duty value cap.
Treated as let-out for the FY; rent for 6 months = annual value; full interest deductible.
Treated as self-occupied; ₹2L cap applies.
Can still treat as self-occupied (CBDT clarification). ₹2L cap retained.
Interest deductible u/s 24(b) — renovation is eligible; ₹2L cap if self-occupied.
Not eligible u/s 24(b); claim as business expense u/s 36.
Loss CANNOT be set off against salary even up to ₹2L; only intra-head + carry-forward.
For self-occupied property — NO. For let-out property — YES, but the resulting loss cannot be set off against other heads.
Self-occupied: ₹2,00,000. Let-out: unlimited (with ₹2L set-off cap and 8-year carry-forward).
Yes — only if both are co-owners, co-borrowers and EMI is paid from both accounts.
Accumulated pre-construction interest is claimed in 5 equal instalments starting from the year construction is completed.
Self-occupied deduction collapses from ₹2L to ₹30,000.
Yes — provided the relative issues an interest certificate and discloses the interest as income.
Only if construction is completed within the prescribed period; plot-only loan is not deductible u/s 24(b).
Yes — treated as interest u/s 24(b).
Yes — treated as interest.
Yes — they are independent deductions under different sections.
Only the borrower spouse can claim 24(b).
Yes; from FY 19-20, two houses can be self-occupied (combined ₹2L cap); third+ are deemed let-out.
Pro-rate interest till date of sale under HP; remaining loan interest (if loan continues for next property) follows the next property's classification.
Treated based on principal use during the year; document via electricity / gas bills.
Request the lender; deduction can be claimed only against a valid certificate during scrutiny.
Section 24(b) is the single most valuable line in a home-loan-borrower's ITR. Knowing the difference between self-occupied and let-out, planning pre-construction amortisation, and structuring joint ownership properly can multiply your annual deduction from ₹2L to ₹5L+ for a couple. Talk to Taxpex CAs at the time of purchase — not at the time of filing.
Senior contributor at Taxpex Consultancy. Reviewed by a practising Chartered Accountant. Published on 11 June 2026 · Updated on 11 June 2026.
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Yes. Any principal prepayment reduces the outstanding balance and therefore future interest. Prepaying earlier in the tenure saves the most interest.
via EMI CalculatorYes. Any principal prepayment reduces the outstanding balance and therefore future interest. Prepaying earlier in the tenure saves the most interest.
via Personal Loan CalculatorEMI is computed using the standard reducing-balance formula: EMI = P × r × (1+r)^N / ((1+r)^N − 1), where P is the principal, r the monthly interest rate and N the tenure in months.
via Home Loan CalculatorYes. Any principal prepayment reduces the outstanding balance and therefore future interest. Prepaying earlier in the tenure saves the most interest.
via Home Loan Calculator