Home loan tax benefit calculator — interest and principal deductions, FY 2026-27

How to use the home loan tax benefit calculator

1. Choose whether The home is self-occupied or let out.
2. Enter the Interest paid this year and Principal repaid this year from your lender’s certificate, and any Pre-construction interest (total).
3. For a let-out home, enter the Annual rent received and Municipal taxes paid this year.
4. For a joint loan, set Your share of the loan and the home.
5. If your loan was sanctioned in one of the older first-home windows, pick it under Older first-home loan.
6. Enter your Annual gross salary, Other Section 123 (80C) investments and Other old-regime deductions, then read the tax saved in each regime.

What it does and when to use it

A home loan can lower your income tax in two ways: through the interest you pay and through the principal you repay. How much it saves depends on whether you live in the home or rent it out, whether the loan is in one name or shared, which tax regime you choose and what else you already claim.

This calculator puts those rules together for tax year 2026-27 (1 April 2026 to 31 March 2027) under the Income-tax Act, 2025. It shows the deductions you are allowed and the tax saved — the difference between your tax with and without the loan’s deductions — in both regimes. Use it when deciding whether the old regime is worth it, when planning a joint loan, or when you are about to let out a home that has a loan on it.

How it works

Self-occupied home (old regime only).

• Interest: the year’s interest plus one-fifth of any pre-construction interest, times your share. It is deductible up to ₹2,00,000 (s.22(2)), or ₹30,000 if the home was not completed within five years of the end of the year you borrowed.
• Extra first-home interest: for loans sanctioned in the s.131 window (1 April 2019 to 31 March 2022) or the s.130 window (2016-17), interest above ₹2,00,000 is deductible up to ₹1,50,000 or ₹50,000.
• Principal: deductible within whatever is left of the ₹1,50,000 Section 123 limit after your other investments.

Let-out home.

Income from house property = (rent − municipal taxes) − 30% of that − interest

• The 30% standard deduction (s.22(1)(a)) covers repairs and upkeep, whatever you actually spend.
• Interest on a let-out home has no upper limit.
• Old regime: a loss is set off against other income up to ₹2,00,000 a year (s.109). The rest is carried forward for eight years against house-property income only (s.110). Principal counts under Section 123.
• New regime: interest can reduce rental income to zero, but a loss cannot be set off against other income and is not carried forward (s.202(2)–(3)).

Tax saved. For each regime the calculator works out your tax twice, with and without the loan’s deductions, using the tax-year 2026-27 slabs, rebate and 4% cess. The difference is the tax saved. For a let-out home both figures include the rent, so the saving shows what the loan’s interest and principal are worth to you.

Worked examples

All figures come from the calculator. The salary examples assume the default other deductions (₹50,000 of Section 123 investments and ₹25,000 of other deductions) unless stated.

Self-occupied, ₹3.5 lakh interest, ₹1 lakh principal, ₹18 lakh salary. Interest is capped at ₹2,00,000, and the full ₹1,00,000 of principal fits in the Section 123 room left. That is ₹3,00,000 of deductions in the 30% slab, so the old regime saves ₹93,600 (₹3,00,000 × 30% × 1.04). The new regime saves nothing. With the loan, old-regime tax is ₹2,34,000 against ₹1,50,800 in the new regime, so this person still pays less in the new regime.

Joint loan, 50% share. A couple shares a loan with ₹5 lakh interest and ₹2 lakh principal a year. Each claims ₹2,50,000 of interest (capped at ₹2,00,000) and ₹1,00,000 of principal. On a ₹15 lakh salary, each partner’s old-regime tax falls to ₹1,40,400, a saving of ₹93,600 each. One borrower alone could claim only ₹2,00,000 of interest and ₹1,00,000 of principal in total.

Let-out home, ₹3 lakh rent, ₹10,000 municipal tax, ₹5 lakh interest. Net annual value is ₹2,90,000, the 30% deduction is ₹87,000, and after interest the result is a loss of ₹2,97,000. In the old regime ₹2,00,000 is set off against salary and ₹97,000 is carried forward. With ₹1 lakh of principal, the loan saves ₹1,56,936 in the old regime. In the new regime the interest only wipes out the ₹2,03,000 of rental income, a saving of ₹42,224, and the rest of the loss is lost.

Older first-home loan (s.131), ₹4 lakh interest. ₹2,00,000 is deductible under s.22 and a further ₹1,50,000 under s.131. With Section 123 already full from other investments, the loan saves ₹1,09,200 in the old regime.

Limits and tips

• Old regime or new? A self-occupied home only helps in the old regime. Check the whole picture with the old vs new tax regime calculator — in the first example the new regime is still cheaper overall.
• Co-owners and co-borrowers. To claim a share you must be both a co-owner and a co-borrower and actually pay your share. The calculator applies the same share to the loan and to rent.
• Two self-occupied homes share one ₹2,00,000 interest limit. A third home is treated as let out even if it is empty.
• Interest certificate. Keep your lender’s certificate; it is needed for the ₹2,00,000 limit.
• Not covered: homes used for your own business, homes held as stock-in-trade, arrears of rent, loans from abroad and capital gains on selling the home.
• Older first-home deductions apply only if you did not own any other house on the date the loan was sanctioned, and only to loans sanctioned in those windows.

Related calculators

Work out your EMI and interest schedule with the home loan EMI calculator or the loan EMI calculator. If you rent rather than own, the HRA calculator shows your HRA exemption. The income tax calculator gives a quick check of your overall tax.