India Home Loan Tax Benefit Calculator

A home loan cuts your tax in two ways under India's old tax regime: the interest part of your EMIs comes off your income under section 24(b), and the principal part counts under section 80C. Early in a loan most of each EMI is interest, so the interest cap matters most; later, principal takes over. This calculator splits each financial year's EMIs (April to March) with the same maths as our EMI calculator and works out your tax with our India income tax calculator, so the numbers match.

The formula

each EMI: interest = loan left × rate ÷ 12; principal = EMI − interest
home you live in: interest allowed = the smaller of (year's interest + 1/5 of pre-construction interest) and ₹2,00,000 (₹30,000 for repairs or late completion)
let-out home: rent income = rent − municipal tax − 30% of that − all the interest; a loss up to ₹2,00,000 comes off other income, the rest is carried forward
80C allowed = the smaller of (principal + stamp duty in year 1) and (₹1,50,000 − other 80C)
joint loan: each owner uses their share of interest and principal, with their own limits
tax saved = old-regime tax without the loan − old-regime tax with it

Worked example

A ₹50,00,000 loan at 8.5% for 20 years, first EMI in April 2026, a ₹15,00,000 salary, no other 80C investments. The EMI is ₹43,391.

• FY 2026-27 has 12 EMIs: ₹5,20,694 paid, of which ₹4,21,182 is interest and ₹99,511 is principal.
• Interest allowed: the smaller of ₹4,21,182 and ₹2,00,000 = ₹2,00,000. The other ₹2,21,182 gets no tax benefit.
• 80C allowed: the smaller of ₹99,511 and ₹1,50,000 = ₹99,511.
• Old-regime tax without the loan: ₹15,00,000 − ₹50,000 standard deduction = ₹14,50,000 taxable; ₹12,500 + ₹1,00,000 + 30% of ₹4,50,000 (₹1,35,000) = ₹2,47,500, plus 4% cess = ₹2,57,400.
• With the loan: ₹14,50,000 − ₹2,00,000 − ₹99,511 = ₹11,50,489 taxable; ₹1,12,500 + 30% of ₹1,50,489 (₹45,147) = ₹1,57,647, plus 4% cess = ₹1,63,952.
• Tax saved in FY 2026-27: ₹2,57,400 − ₹1,63,952 = ₹93,448. Over all 20 years it adds up to ₹19,74,068.

The new regime on the same salary is ₹15,00,000 − ₹75,000 = ₹14,25,000 taxable: ₹20,000 + ₹40,000 + ₹33,750 = ₹93,750, plus 4% cess = ₹97,500. That is ₹66,452 less than the old regime even with the home-loan deductions, so this person is better off in the new regime unless they have other large deductions.

A let-out home

Same loan, but the home is rented out for ₹25,000 a month. Rent for the year is ₹3,00,000; 30% of that (₹90,000) comes off for repairs, leaving ₹2,10,000. Take off all the interest, ₹4,21,182, and you have a loss of ₹2,11,182. Up to ₹2,00,000 of it comes off your salary this year; the other ₹11,182 is carried forward and can only be set against rental income in the next 8 years check the current rule.

A joint loan

If two owners share the same loan 50/50, each has ₹2,10,591 of interest and ₹49,756 of principal in FY 2026-27. Each claims ₹2,00,000 of interest (their own cap) plus ₹49,756 under 80C, so together they deduct ₹4,99,511, against ₹2,99,511 if one person had the whole loan. You must be a co-owner of the home as well as a co-borrower to claim.

Pre-construction interest

Interest paid while the home is being built is added up and claimed in five equal parts from the year you get possession. ₹2,50,000 of it gives ₹50,000 a year for five years. For a home you live in, those parts sit inside the same ₹2,00,000 yearly cap, so with a large loan they may add nothing.

The rules this calculator uses

• If you sell the home within 5 years of the end of the year you got it, the 80C principal you claimed is added back to your income in the year of sale check the current rule.
• Sections 80EE and 80EEA gave extra interest deductions for loans sanctioned in FY 2016-17 and between 1 April 2019 and 31 March 2022. They are not included here.
• The tax uses the FY 2026-27 slabs for every year and assumes your salary stays the same. Your actual tax will change as your pay and the rules change.

Interest caps, the 30% deduction, pre-construction and co-owner rules checked on 18 Oct 2026 on the Income Tax Department's income from house property page (as amended by Finance Act 2025). Items marked "check the current rule" were not shown on that page. From 1 April 2026 these rules sit in the Income-tax Act 2025 with new section numbers; this page uses the familiar 1961 Act numbers. This calculator gives an estimate, not tax advice.