Last reviewed: 8 July 2026. Own a house, or pay a home loan? How your property is taxed - and what you can deduct - depends on whether it is self-occupied or let out, and on which tax regime you choose. This guide explains house property income, the home loan interest and principal benefits, and the important limits for AY 2026-27 in plain terms.
Quick summary
Self-occupied vs let-out
| Item | Self-occupied | Let-out (rented) |
|---|---|---|
| Annual value | Nil | Rent received (less municipal taxes) |
| Standard deduction | Not applicable | 30% of net annual value |
| Home loan interest (old regime) | Up to Rs 2 lakh | Full interest |
| Home loan interest (new regime) | Not allowed | Allowed, but loss not set off against other income |
The two home loan benefits (old regime)
- Interest - under Section 24(b), up to Rs 2 lakh a year for a self-occupied house, or the full interest for a let-out house.
- Principal - the principal repaid qualifies under Section 80C, within the overall Rs 1.5 lakh limit.
House property loss and set-off
If interest exceeds the rent (or on a self-occupied house), you get a loss from house property, which can be set off against your other income up to Rs 2 lakh a year; anything beyond that is carried forward for up to 8 years. Under the new regime, a let-out house loss cannot be set off against other income at all.
Frequently asked questions
How is home loan interest deductible?
For a self-occupied house, interest on the home loan is deductible up to Rs 2 lakh a year under Section 24(b) in the old regime. For a let-out (rented) house, the full interest is deductible against the rent.
Can I claim home loan interest in the new tax regime?
For a self-occupied house, no - interest is not deductible under the new regime. For a let-out house, the interest is deductible, but a resulting loss cannot be set off against your other income.
What is the standard deduction on rental income?
For a let-out property, you get a flat 30% standard deduction on the net annual value (rent minus municipal taxes), on top of the home loan interest deduction.
Can I claim the principal repayment of my home loan?
Yes, in the old regime - the principal portion qualifies under Section 80C, within the overall Rs 1.5 lakh limit. It is not available in the new regime.
How much house property loss can I set off?
A loss from house property can be set off against other income up to Rs 2 lakh in a year; the balance is carried forward for up to 8 years to set off against future house property income.
Is rent from my own house taxable?
A self-occupied house has a nil annual value, so there is no rental income to tax - you only claim the interest deduction. Rent from a let-out house is taxable after the standard deduction and interest.
We compute your house property income, apply the right regime and get you every deduction you are entitled to.
Income Tax FilingNotice ManagementTalk to CA Somesh Chandak & Associates - we are happy to help.
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