What your home loan actually saves you in tax.
Most tax calculators assume you use the full ₹2 lakh deduction every year. You usually don't — and in the early years, you can't. This one runs the caps against your real amortisation schedule, year by year, and shows you how much of your interest gets no relief at all.
Year by year — where the deduction dies
The ₹2 lakh ceiling is a rupee amount, not a percentage. Early on your interest is far above it and the excess is simply lost. Late on your interest falls below it and the deduction shrinks with your loan. This is the table a single-year calculator cannot show you.
| Year | Interest paid | Claimed 24(b) | Wasted | Claimed 80C | Tax saved |
|---|
Why this differs from your bank's calculator
- It does not assume you use the full cap. On a ₹50 lakh loan at 8.5%, year-1 interest is ₹4,21,182 — the cap shelters ₹2,00,000 and ₹2,21,182 gets nothing. Over the full loan, roughly 36% of your interest earns no relief.
- 80C is shared. Your principal competes with EPF, PPF, ELSS and insurance for one ₹1.5 lakh limit. If EPF already fills it, your principal repayment is worth zero. Set the field above honestly.
- The regime decides everything. On the new regime a self-occupied home earns no deduction at all, and your effective rate is the headline rate.
- Let-out is a different calculation. All interest is deductible against rent, but the resulting loss only offsets other income up to ₹2 lakh a year; the rest carries forward eight years.
This is not tax advice. It is arithmetic on the caps as they stand in July 2026. Confirm your own position with a CA — especially for let-out property and joint loans.
Sources & standards
Every regulated figure on this page, what it is, and the primary source it comes from. Two Acts are live: the Income-tax Act, 1961 governs FY 2025-26 — the return being filed now — while the Income-tax Act, 2025 governs FY 2026-27 onward. The amounts are unchanged; only the section numbers moved.
| What | Current value | Source | Verified |
|---|---|---|---|
| Interest deduction cap — self-occupied property | ₹2,00,000/yr | Income-tax Act, 1961 — s.24(b) (FY 2025-26 & earlier) Income-tax Act, 2025 — s.22(1)(b) & (c); cap in s.22(2) (in force 1 Apr 2026) | 2026-07 |
| Interest cap if construction not completed within 5 years | ₹30,000/yr | Income-tax Act, 1961 — s.24(b) proviso (FY 2025-26 & earlier) Income-tax Act, 2025 — s.22(2)(b) (in force 1 Apr 2026) | 2026-07 |
| Principal repayment deduction cap (shared with EPF, PPF, ELSS, insurance) | ₹1,50,000/yr | Income-tax Act, 1961 — s.80C (FY 2025-26 & earlier) Income-tax Act, 2025 — s.123, read with Schedule XV (in force 1 Apr 2026) | 2026-07 |
| Default tax regime — disallows s.24(b) self-occupied, 80C and HRA | std deduction ₹75,000 7 slabs, top rate 30% | Income-tax Act, 1961 — s.115BAC (FY 2025-26 & earlier) Income-tax Act, 2025 — s.202 (in force 1 Apr 2026) | 2026-07 |
| Health & education cess on income tax | 4% | 2026-07 |
Not tax or legal advice. See every standard this site uses →