Property · Home Loan
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
The most valuable deduction for salaried home owners in the old tax regime. Up to ₹2L of home loan interest per year is deductible from taxable income. At 30% bracket, this saves ₹60,000 in tax every year. But there are conditions: property must be self-occupied, possession must have happened within 5 years of loan, old regime only.
Sec 22(1)(a) (old 24(a)); Sec 22(1)(b) (old 24(b)); Pre-1999 loan; 5-year completion rule; New Regime
The ₹2L deduction in practice: Home loan outstanding: ₹40L at 8.5% interest. Annual interest paid in Year 3: approximately ₹3.3L (most of EMI is interest in early years). Section 22(1)(b), Income-tax Act 2025 (old Sec 24(b)) cap: ₹2L. Deduction: ₹2L. Tax saving at 30%: ₹60,000. Remaining ₹1.3L interest: NOT deductible for self-occupied. The ₹1.3L "wasted" interest is the cost of the cap. Why possession within 5 years matters: Loan taken FY 2019-20. 5-year deadline: March 31, 2024. If builder delays and you get possession in May 2024 (FY 2024-25 = 5 years 2 months after FY of loan): the ₹2L cap drops to ₹30,000 permanently for this property. RERA remedy: builder is liable for delay. You may claim compensation from builder. File RERA complaint if builder delays possession. Home loan interest certificate from bank: Bank provides annual home loan statement.
Connect now
A Savvy replies in minutes.
Fixed price before you pay. Your Savvy is paid only after you accept the work.
General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.