A home loan EMI feels heavy every month, but at tax time it works for you twice. Knowing both halves of the benefit can change the regime you should file in.
The interest half: Section 24(b)
Interest paid on a loan for a self occupied house is deductible up to Rs 2 lakh a year in the old regime. For a rented out property, the full interest is deductible against rental income, though the overall loss you can set off against other income is capped at Rs 2 lakh a year, with the balance carried forward.
The principal half: Section 80C
The principal portion of your EMI counts inside the Rs 1.5 lakh 80C limit, along with stamp duty and registration charges in the year you pay them. One caveat: sell the house within 5 years and past 80C claims get reversed.
What this means in practice
A borrower paying Rs 1.8 lakh interest and Rs 1.2 lakh principal can shave Rs 3 lakh off taxable income in the old regime. Deductions of that size are exactly what makes the old regime beat the new one, especially when stacked with HRA rules for people who own in one city and rent in another (yes, you can often claim both).
Get the split right
Your bank's annual interest certificate shows the interest versus principal split. Upload it or enter the two numbers in Saathi.Tax, and we place each in the right section and tell you which regime wins with the loan factored in.
