Owning a house can provide financial security and regular rental income. However, homeowners also incur expenses such as home loan interest, repairs and municipal taxes. Fortunately, the Income Tax law allows certain deductions while calculating taxable income from house property.
Earlier, Section 24 of the Income-tax Act, 1961 allowed homeowners to claim a standard deduction of 30% and a deduction for interest on borrowed capital.
However, the Income-tax Act, 2025 came into effect on 1 April 2026 and replaced the earlier law. Under the new Act, Section 22 covers deductions from house property income.
Although the section numbers have changed, the main benefits continue. Nevertheless, the deduction available to a taxpayer depends on whether the property is self-occupied or rented and whether the taxpayer follows the old or new tax regime.
In this article, we explain Section 24 deductions, the corresponding provisions of the Income-tax Act, 2025, home loan interest limits, rental income calculations, TDS on rent and common tax-saving opportunities.
What Is Section 24 of the Income Tax Act?
Section 24 of the Income-tax Act, 1961 allowed taxpayers to claim specified deductions while calculating income from house property.
It mainly provided two deductions:
- Section 24(a): Standard deduction of 30% of the net annual value.
- Section 24(b): Deduction for interest on borrowed capital used for purchasing, constructing, repairing, renewing or reconstructing a property.
From 1 April 2026, Section 22 of the Income-tax Act, 2025 governs these deductions.
Therefore, taxpayers preparing returns for Tax Year 2026–27 should follow the provisions of the new Act.
Section 24 vs Section 22 Under the New Income-tax Act
| Particulars | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| House property income computation | Sections 22–27 | Sections 20–24 |
| Standard deduction | Section 24(a) | Section 22(1)(a) |
| Home loan interest | Section 24(b) | Section 22(1)(b) |
| Pre-construction interest | Section 24(b) | Section 22(1)(c) |
| Standard deduction rate | 30% | 30% |
Thus, the new law reorganises the provisions without removing the main house property deductions.
What Is Section 24(a) of Income Tax?
Section 24(a) allowed homeowners to claim a standard deduction equal to 30% of the net annual value of their property.
Under the Income-tax Act, 2025, Section 22(1)(a) provides the corresponding deduction.
The government allows this deduction to cover general expenses related to maintaining a house property.
For example, property owners may spend money on repairs, painting, maintenance and other expenses. However, they do not need to prove that they actually spent 30% of the rental income.
Instead, they can claim the standard deduction while calculating income from a let-out or deemed let-out property.
How to Calculate the 30% Standard Deduction
First, taxpayers must calculate the net annual value of the property.
The general formula is:
Net Annual Value = Gross Annual Value − Eligible Municipal Taxes Actually Paid by the Owner
Next, they can calculate the standard deduction at 30% of the net annual value.
Example of Standard Deduction on Rental Income
Suppose Mr. A owns a residential flat in Greater Noida and rents it out for ₹30,000 per month.
During the year, he pays ₹20,000 in eligible municipal taxes.
| Particulars | Amount |
|---|---|
| Annual Rental Income (₹30,000 × 12) | ₹3,60,000 |
| Less: Municipal Taxes Paid | ₹20,000 |
| Net Annual Value | ₹3,40,000 |
| Standard Deduction at 30% | ₹1,02,000 |
| Income After Standard Deduction | ₹2,38,000 |
Therefore, Mr. A can claim a standard deduction of ₹1,02,000.
The example assumes that the actual rent represents the property’s gross annual value under the applicable rules.
Furthermore, if Mr. A pays eligible interest on a home loan, he may claim an additional deduction while calculating house property income.
When Is the Standard Deduction Not Available?
The 30% standard deduction does not provide a separate benefit in every situation.
Self-Occupied House Property
When taxpayers use a qualifying property for their own residence, the law generally treats its annual value as nil.
Since the annual value is nil, the 30% standard deduction also becomes nil.
Therefore, homeowners cannot claim a separate standard deduction merely because they spend money on repairs or maintenance.
Unsold Property Held as Stock-in-Trade
Builders and developers sometimes hold completed flats as stock-in-trade.
The law provides a limited period during which the annual value of qualifying unsold properties may be treated as nil.
During this relief period, the standard deduction does not create a separate benefit because the annual value is nil.
However, once the applicable relief period ends, normal house property taxation may apply.
What Is Section 24(b) of Income Tax?
Section 24(b) of the earlier Income-tax Act allowed taxpayers to claim a deduction for interest on borrowed capital.
The deduction applied to loans used for purchasing, constructing, repairing, renewing or reconstructing house property.
From 1 April 2026, Section 22(1)(b) of the Income-tax Act, 2025 provides the corresponding deduction.
However, the deduction limit depends on the property’s use and the taxpayer’s chosen tax regime.
Home Loan Interest Deduction Limit in 2026
The tax treatment differs for self-occupied and let-out properties.
Home Loan Interest Deduction Under the Old Tax Regime
| Property Type | Purpose of Loan | Maximum Deduction |
|---|---|---|
| Self-occupied | Purchase or construction, subject to prescribed conditions | ₹2,00,000 |
| Self-occupied | Repairs, renewal or reconstruction | ₹30,000 |
| Self-occupied | Purchase or construction where higher-limit conditions are not met | ₹30,000 |
| Let-out | Eligible borrowing purposes | Actual eligible interest |
| Deemed let-out | Eligible borrowing purposes | Actual eligible interest |
For let-out properties, the law does not impose the same property-level interest ceiling that applies to self-occupied properties.
However, taxpayers must separately consider the rules for setting off house property losses.
Conditions for Claiming ₹2 Lakh Interest Deduction
To claim the higher deduction for a self-occupied house under the old tax regime, taxpayers generally need to satisfy the following conditions:
- They must borrow money to purchase or construct the property.
- The borrowing must satisfy the applicable statutory conditions.
- They must complete the acquisition or construction within five years from the end of the tax year in which they borrowed the money.
- They must obtain an interest certificate from the lender.
If taxpayers fail to satisfy the prescribed conditions, the deduction may be restricted to ₹30,000.
Moreover, the ₹2 lakh limit applies to the aggregate eligible interest deduction for qualifying self-occupied properties.
Home Loan Interest Deduction Under the New Tax Regime
The new tax regime provides different treatment for self-occupied and rented properties.
| Property Type | Interest Deduction Under New Tax Regime |
|---|---|
| Self-occupied | Not available |
| Let-out | Eligible interest allowed while calculating house property income |
| Deemed let-out | Eligible interest allowed while calculating house property income |
Therefore, taxpayers cannot claim a home loan interest deduction for a self-occupied house under the new tax regime.
However, they can generally deduct eligible interest while calculating income from a let-out property.
Nevertheless, the new regime restricts the set-off and carry-forward of house property losses.
Consequently, taxpayers should compare both tax regimes before deciding which option is more beneficial.
Example of Home Loan Interest Deduction for Self-Occupied Property
Suppose Mrs. B owns a self-occupied flat in Greater Noida.
She pays ₹2,50,000 as home loan interest during Tax Year 2026–27.
Assume that the loan and property satisfy the conditions for the higher interest deduction.
| Particulars | Old Tax Regime | New Tax Regime |
|---|---|---|
| Annual Home Loan Interest | ₹2,50,000 | ₹2,50,000 |
| Maximum Eligible Deduction | ₹2,00,000 | Nil |
| Interest Not Deductible | ₹50,000 | ₹2,50,000 |
Under the old tax regime, Mrs. B can claim ₹2,00,000 as an interest deduction.
However, under the new tax regime, she cannot claim the interest deduction for her self-occupied house.
Therefore, taxpayers should compare their overall tax liability under both regimes rather than considering only the home loan deduction.
Example of Home Loan Interest Deduction for Let-Out Property
Suppose Mr. C owns a rented house.
During the year, he earns ₹4,80,000 in rent, pays ₹30,000 in eligible municipal taxes and incurs ₹3,50,000 in home loan interest.
| Particulars | Amount |
|---|---|
| Gross Annual Value | ₹4,80,000 |
| Less: Municipal Taxes Paid | ₹30,000 |
| Net Annual Value | ₹4,50,000 |
| Less: Standard Deduction at 30% | ₹1,35,000 |
| Less: Home Loan Interest | ₹3,50,000 |
| Income from House Property | -₹35,000 |
Therefore, Mr. C has a house property loss of ₹35,000.
Under the old tax regime, eligible taxpayers can generally set off house property losses against income under other heads up to ₹2 lakh during the year.
However, the new tax regime does not allow such a set-off against income under other heads.
Thus, the same property may produce different tax benefits depending on the applicable regime.
What Is Pre-Construction Interest?
Many people purchase under-construction houses through home loans.
For example, a buyer may start paying interest before the builder completes the property.
The law treats eligible interest relating to the period before acquisition or completion as pre-construction or pre-acquisition interest.
Under Section 22(1)(c) of the Income-tax Act, 2025, taxpayers can generally claim eligible prior-period interest in five equal annual instalments.
The deduction starts from the tax year in which they acquire or complete the property.
Example of Pre-Construction Interest
Suppose Mr. D pays ₹2,00,000 in eligible pre-construction interest before completing his house.
| Particulars | Amount |
|---|---|
| Total Pre-Construction Interest | ₹2,00,000 |
| Number of Instalments | 5 |
| Annual Instalment | ₹40,000 |
Therefore, Mr. D can claim ₹40,000 annually for five years, subject to the applicable deduction rules.
However, for a qualifying self-occupied property under the old tax regime, the annual pre-construction interest instalment and current-year interest together fall within the overall ₹2 lakh or ₹30,000 ceiling, as applicable.
The Finance Act, 2026 clarified the treatment of this aggregate ceiling.
Can You Claim Home Loan Interest Before Possession?
Generally, taxpayers cannot immediately claim the accumulated pre-construction interest before acquiring or completing the property.
Instead, they can claim the eligible amount in five annual instalments after the property qualifies.
For example, suppose a taxpayer purchases an under-construction flat in Greater Noida and pays interest during construction.
If the property is completed in Tax Year 2026–27, the taxpayer can generally begin claiming eligible pre-construction interest instalments from that year.
However, the deduction depends on the property’s classification, applicable tax regime and prescribed limits.
Can You Claim Section 24 Deduction on a Joint Home Loan?
Yes. Joint property owners can claim eligible deductions separately if they satisfy the applicable conditions.
However, being a co-borrower does not automatically establish eligibility.
The taxpayer claiming the deduction must have the relevant ownership interest and bear the corresponding interest liability.
Example of Joint Home Loan Deduction
Suppose a husband and wife jointly own a residential house in equal proportions.
They also share the home loan interest equally.
During the year, they pay ₹4,00,000 in qualifying interest.
| Particulars | Husband | Wife |
|---|---|---|
| Ownership Share | 50% | 50% |
| Share of Interest | ₹2,00,000 | ₹2,00,000 |
| Potential Deduction Under Old Regime | ₹2,00,000 | ₹2,00,000 |
If both taxpayers satisfy the conditions for the higher deduction and choose the old tax regime, each may claim ₹2,00,000.
However, their actual eligibility depends on ownership, borrowing arrangements and other statutory requirements.
Can You Claim Home Loan Interest on a Loan from Relatives?
Yes. The law does not restrict the interest deduction only to loans from banks or financial institutions.
Therefore, taxpayers may claim eligible interest on genuine loans taken from relatives or other persons, subject to the prescribed conditions.
However, they should maintain supporting documents, including:
- Loan agreement or written confirmation
- Bank transfer records
- Interest calculation
- Interest certificate or confirmation from the lender
- Evidence showing the use of borrowed money
For example, suppose a taxpayer borrows money from a parent to purchase a residential house and pays genuine interest.
The interest may qualify for deduction under the applicable house property provisions.
However, the principal repayment generally does not qualify for the housing loan deduction available under the relevant investment deduction provisions for specified lenders.
Can You Claim Both Home Loan Interest and Principal Repayment Deductions?
Yes, eligible taxpayers may claim separate deductions for home loan interest and principal repayment under the old tax regime.
However, the two deductions fall under different provisions.
| Payment | Earlier Income-tax Act, 1961 | General Treatment |
|---|---|---|
| Home loan interest | Section 24(b) | Deduction while calculating house property income |
| Eligible principal repayment | Section 80C | Deduction within the overall prescribed limit |
Under the Income-tax Act, 2025, taxpayers must refer to the corresponding provisions of the new Act for Tax Year 2026–27.
Furthermore, principal repayment deductions are generally not available under the new tax regime.
Therefore, taxpayers should check the applicable regime before claiming both benefits.
TDS on Rental Income Under the Income-tax Act, 2025
Apart from house property deductions, taxpayers should also understand the TDS rules that apply to rental payments.
Earlier, the Income-tax Act, 1961 covered common rental TDS situations under Sections 194-I and 194-IB.
From 1 April 2026, Section 393 of the Income-tax Act, 2025 governs the corresponding TDS provisions for payments to residents.
Old and New TDS Sections on Rent
| Nature of Payment | Earlier Act | Income-tax Act, 2025 |
|---|---|---|
| Rent paid by specified persons | Section 194-I | Section 393(1), Table Serial No. 2(ii) |
| Rent paid by certain individuals or HUFs outside the specified-person category | Section 194-IB | Section 393(1), Table Serial No. 2(i) |
TDS Rates on Rent in 2026
| Type of Rent Payment | TDS Rate | General Threshold |
|---|---|---|
| Rent for land, building, furniture or fittings paid by specified persons | 10% | ₹50,000 for a month or part of a month |
| Rent for machinery, plant or equipment paid by specified persons | 2% | ₹50,000 for a month or part of a month |
| Rent paid by certain individuals or HUFs outside the specified-person category | 2% | ₹50,000 for a month or part of a month |
These rates apply to the relevant resident-payee transactions, subject to the statutory conditions.
Different provisions may apply when the landlord is a non-resident.
Example of TDS on Rent
Suppose a company rents an office in Greater Noida for ₹70,000 per month from a resident landlord.
Assuming the company falls within the specified payer category, it generally needs to deduct TDS at 10%.
| Particulars | Amount |
|---|---|
| Monthly Rent | ₹70,000 |
| TDS Rate | 10% |
| Monthly TDS | ₹7,000 |
| Net Rent Paid to Landlord | ₹63,000 |
Therefore, the company generally deducts ₹7,000 as TDS, subject to the applicable provisions.
However, TDS is not an additional deduction under the house property provisions.
Instead, the landlord can generally claim credit for the tax deducted while filing the income tax return.
Furthermore, the timing of deduction and filing requirements depend on the applicable category of rent payment.
Can Landlords Claim TDS Deducted by Tenants?
Yes. When a tenant deducts and deposits TDS correctly, the landlord can generally claim credit for that tax.
For example, suppose a landlord earns ₹8,40,000 in annual rent and the tenant deducts ₹84,000 in TDS.
The landlord must report the rental income under the applicable house property provisions and calculate the tax after eligible deductions.
Thereafter, the landlord can claim the available TDS credit against the final tax liability.
However, landlords should verify the credit in Form 26AS and other relevant tax records.
If the credit does not appear correctly, they should contact the tenant or deductor to resolve the mismatch.
Common Mistakes While Claiming House Property Deductions
Taxpayers often make avoidable errors while calculating income from house property.
Claiming Home Loan Interest Under the Wrong Tax Regime
Some taxpayers claim the self-occupied home loan interest deduction while following the new tax regime.
However, the new regime does not allow that deduction for self-occupied property.
Claiming ₹2 Lakh for Every Self-Occupied House
The ₹2 lakh limit generally applies to aggregate eligible interest for qualifying self-occupied properties.
Therefore, taxpayers cannot automatically claim ₹2 lakh separately for each house.
Claiming Pre-Construction Interest in One Year
Some homeowners deduct the entire accumulated pre-construction interest immediately after receiving possession.
However, the law generally requires them to spread eligible prior-period interest over five annual instalments.
Claiming Principal Repayment Under House Property Income
Principal repayment and home loan interest follow different tax provisions.
Therefore, taxpayers should not include principal repayment as an interest deduction.
Ignoring Municipal Tax Payment Conditions
Taxpayers may deduct eligible municipal taxes while calculating annual value only when the applicable conditions are satisfied.
Merely receiving a municipal tax demand does not automatically create the deduction.
Ignoring Rental TDS Compliance
Tenants may have TDS obligations when rent exceeds the prescribed threshold.
Therefore, landlords and tenants should review the applicable provisions before making or receiving rental payments.
House Property Tax Planning in Greater Noida
Greater Noida has several residential societies, independent houses and commercial properties.
Many property owners purchase flats through home loans and later rent them out.
However, tax calculations can become complicated when owners have multiple properties, joint ownership arrangements or both rental and salary income.
For example, a salaried professional in Greater Noida may own one self-occupied flat and another rented property.
In this situation, the taxpayer must calculate income from each property, apply the relevant interest deductions and consider the restrictions under the chosen tax regime.
Similarly, a business owner who rents out commercial property may need to consider both house property income and rental TDS compliance.
Therefore, taxpayers should review their property records, loan interest certificates and rental agreements before filing their income tax returns.
House Property Deduction Checklist
Before claiming house property deductions, taxpayers should complete the following checks:
- Identify whether the property is self-occupied, let-out or deemed let-out.
- Calculate the correct gross annual value.
- Deduct eligible municipal taxes actually paid by the owner.
- Calculate the 30% standard deduction, where applicable.
- Obtain the home loan interest certificate.
- Check whether the ₹2 lakh or ₹30,000 interest limit applies.
- Calculate eligible pre-construction interest separately.
- Verify the ownership and borrowing arrangements for joint properties.
- Compare the old and new tax regimes.
- Review the restrictions on house property loss set-off.
- Check rental TDS obligations under Section 393.
- Reconcile available TDS credit with tax records.
- Maintain supporting documents for income tax return filing.
Following these steps can help homeowners claim eligible deductions correctly and avoid common filing mistakes.
Important Official Reference Links
Taxpayers can refer to the following official resources for updated house property deduction and rental TDS provisions.
- Income-tax Act, 2025 – Official Act
https://incometaxindia.gov.in/Documents/Act/Income-tax-Act-2025.pdf - Section 22 – Deductions from Income from House Property
https://www.incometaxindia.gov.in/w/section-22-211 - Section 393 – Tax Deduction at Source
https://www.incometaxindia.gov.in/w/section-393-5 - Income Tax e-Filing Portal
https://www.incometax.gov.in/iec/foportal/ - Union Budget 2026–27
https://www.indiabudget.gov.in/
Conclusion
House property deductions help taxpayers reduce their taxable rental income and claim eligible home loan interest benefits.
Earlier, Section 24 of the Income-tax Act, 1961 governed these deductions. However, from 1 April 2026, Section 22 of the Income-tax Act, 2025 provides the corresponding rules.
The law continues to allow a 30% standard deduction on eligible net annual value. In addition, qualifying homeowners may claim interest deductions, subject to the prescribed conditions and limits.
However, the old and new tax regimes provide different benefits, particularly for self-occupied properties and house property losses.
Furthermore, landlords and tenants should understand the updated rental TDS provisions under Section 393 of the Income-tax Act, 2025.
Therefore, taxpayers should maintain accurate property records, review their loan documents and select the appropriate tax regime before filing their income tax returns.
With proper planning and correct reporting, homeowners can claim the deductions available under the law while avoiding unnecessary tax disputes.
Frequently Asked Questions (FAQs)
1. What is Section 24 of the Income Tax Act?
Section 24 of the Income-tax Act, 1961 allowed deductions for standard expenses and home loan interest while calculating income from house property. From 1 April 2026, Section 22 of the Income-tax Act, 2025 provides the corresponding deductions.
2. What is the new section for home loan interest deduction in 2026?
Section 22(1)(b) of the Income-tax Act, 2025 covers the deduction for eligible interest on borrowed capital. Section 22(1)(c) separately covers eligible pre-construction interest instalments.
3. Can I claim a ₹2 lakh home loan interest deduction in 2026?
Yes. Under the old tax regime, eligible taxpayers can generally claim up to ₹2 lakh for qualifying self-occupied property interest, subject to the prescribed conditions. However, the new tax regime does not allow this deduction for self-occupied property.
4. Is the 30% standard deduction available under the new tax regime?
Yes. Taxpayers can generally claim the 30% standard deduction while calculating eligible income from let-out or deemed let-out house property under both tax regimes.
5. Can I claim home loan interest on a rented property?
Yes. Taxpayers can generally deduct eligible home loan interest while calculating income from a let-out property. However, the rules for setting off and carrying forward house property losses differ between tax regimes.
6. Can I claim home loan interest before receiving possession?
Generally, taxpayers cannot claim accumulated pre-construction interest immediately before acquisition or completion. Instead, they can claim eligible prior-period interest in five equal annual instalments starting from the relevant completion or acquisition year.
7. Can husband and wife claim separate home loan deductions?
Yes. If both spouses have the relevant ownership interest, bear the corresponding interest liability and satisfy the prescribed conditions, they may claim deductions according to their respective shares.
8. Can I claim interest on a home loan taken from my parents?
Yes. Interest on a genuine loan taken from parents or other persons may qualify under the house property provisions if the taxpayer satisfies the applicable conditions and maintains supporting evidence.
9. What is the new TDS section for rent in 2026?
Section 393 of the Income-tax Act, 2025 covers the relevant TDS provisions on rent paid to residents. It replaces the corresponding provisions previously covered by Sections 194-I and 194-IB.
10. What is the TDS rate on house rent in 2026?
For qualifying rent paid by specified persons for land or buildings, the rate is generally 10%. Certain individuals and HUFs outside the specified-person category generally deduct TDS at 2%, subject to the ₹50,000 monthly threshold and other applicable conditions.
11. Can I claim both home loan interest and principal repayment deductions?
Eligible taxpayers may claim separate deductions for home loan interest and qualifying principal repayment under the old tax regime, subject to the relevant conditions. However, the new tax regime generally does not allow these benefits for a self-occupied house.
12. Is Section 24 still applicable after 1 April 2026?
Section 24 remains relevant when discussing the Income-tax Act, 1961 and tax years governed by that Act. However, taxpayers calculating house property income for Tax Year 2026–27 should refer to Section 22 of the Income-tax Act, 2025.