BooksIQSelf-occupied house: interest on housing loan deductible up to ₹2,00,000 per year. Let-out house: ENTIRE interest deductible, but the resulting house-property LOSS that can be set off against other heads is capped at ₹2,00,000 (balance carried forward 8 years). Self-occupied benefit is OLD regime only.
Key points
- §24(b) allows, under 'Income from House Property', a deduction for INTEREST on borrowed capital.
- SELF-OCCUPIED property: up to ₹2,00,000 per year if the loan was taken for acquisition/construction completed within 5 years (else ₹30,000);
- ₹30,000 also for repair/renovation loans.
- LET-OUT / deemed let-out property: the ENTIRE interest is deductible.
- However §71(3A) caps the SET-OFF of house property loss against OTHER heads of income at ₹2,00,000 per year;
- the unabsorbed loss is carried forward for 8 assessment years (set off only against house-property income).
- Principal repayment is separately deductible under §80C.
- Under the NEW regime, the self-occupied interest deduction is NOT available, and let-out interest is allowed but the loss cannot be set off against other heads.
Reference: §24(b) read with §71(3A), ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §22(1)(b)
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