Your EMI is one number. What it saves you in tax is a different one entirely — and under the new regime a self-occupied house gets no interest deduction at all. This works out both regimes side by side.
The deduction you get depends less on your loan than on two choices: how the property is used, and which regime you file under.
For a self-occupied house, Section 24(b) allows interest up to ₹2,00,000 a year and not a rupee more. For a let-out property the entire interest is deductible against rental income — but if that produces a loss, Section 71(3A) caps the set-off against your other income at ₹2,00,000 a year. The balance is carried forward for eight assessment years and can only be set off against house property income.
Under Section 115BAC, a self-occupied property gets no interest deduction at all, and Section 80C and 80EEA are unavailable. A let-out property still gets its interest deduction, but the resulting loss cannot be set off against salary or any other head. For most borrowers with one self-occupied house, this single fact is the whole old-versus-new decision.
Principal repayment is not a separate deduction. It shares the ₹1,50,000 ceiling with EPF, ELSS, life insurance premium, children’s tuition fees and the rest. If your EPF alone fills that limit, the principal gives you nothing. Note also the clawback: sell the house within five years of the end of the year of possession and the 80C already claimed is added back to your income.
Each co-owner claims in proportion to ownership — but only if they are both a co-owner and a co-borrower, and are actually servicing the loan from their own funds. Two qualifying owners can therefore claim ₹2 lakh each of interest and ₹1.5 lakh each of principal. Being merely a co-applicant on the loan without ownership, or an owner who does not repay, does not qualify.
The calculator does the arithmetic. TaxSphere — our free case-law library, 1,184 authorities and the Act in full — has the judgments, the circulars and the statutory text for the same provision.
