This was Section 24(b) under the Income-tax Act 1961. See the mapping
Income from house property
Section 22, Income-tax Act 2025: Deductions from income from house property
Plain-English summary
The home-loan interest deduction, Section 24 of the 1961 Act renumbered. On a self-occupied home the cap is ₹2 lakh of interest a year (₹30,000 for repair loans or where construction misses the five-year deadline), and the cap is shared across both self-occupied homes the law allows. A let-out property deducts interest without any ceiling, plus a 30% standard deduction on its annual value, though the loss you can set against salary is capped at ₹2 lakh on the old regime. Interest paid while the house was under construction is released in five equal yearly slices after completion. The new regime allows the interest only against rental income from a let-out property.
What changed when Section 24 became Section 22?
The numbers survived; the drafting was reorganised. The 30% standard deduction and the interest deduction, clauses (a) and (b) of the old Section 24, are now clauses of Section 22(1), with pre-construction interest promoted from a proviso to a clause of its own. The ₹2,00,000 and ₹30,000 caps sit in 22(2), the lender-certificate requirement in 22(4), the combined cap across self-occupied homes in 22(5), and the bar on deducting interest paid abroad without Indian TDS in 22(6).
One condition quietly retired: the 1961 Act's ₹2 lakh cap required the loan to be taken on or after 1 April 1999. Practitioner copies of the 2025 text keep the five-year completion condition and the certificate but drop that long-spent date.†
Section number and clause structure per practitioner copies of the enacted Act (Indian Kanoon, AUBSP, EZTax); pending CA verification against the Gazette text.†
Which deductions does Section 22 allow?
Three, and they cover almost everything a landlord or borrower claims against house property income:
- A flat 30% of the annual value, no receipts required. It exists only for property with an annual value, so a let-out or deemed let-out house gets it and a self-occupied one (annual value nil) does not.
- Interest on capital borrowed to acquire, construct, repair, renew or reconstruct the property, capped for self-occupied homes and uncapped for let-out ones.
- Pre-construction interest, accumulated while the house was being built and released in five equal yearly instalments once it is complete.
What are the interest caps on a self-occupied home?
Two homes can be self-occupied at nil annual value at the same time (Section 21 of the new Act carries the two-house rule†), but they share one ₹2 lakh interest ceiling between them. A third house is deemed let-out and taxed on notional rent, with uncapped interest on the other side of that bargain.
| Situation | Cap per year | Conditions |
|---|---|---|
| Bought or built, completed within 5 years of the borrowing year | ₹2,00,000 | Lender's interest certificate required |
| Completion misses the 5-year deadline | ₹30,000 | The cap drops whatever the loan size |
| Loan taken for repair, renewal or reconstruction | ₹30,000 | The ₹2 lakh cap is for acquisition and construction only |
| Both self-occupied homes together | ₹2,00,000 | One combined ceiling under Section 22(5) |
How is a let-out property computed?
When interest is large the result is usually a loss. On the old regime up to ₹2,00,000 of house property loss can be set against salary or other income in the year; whatever exceeds that carries forward for eight tax years, usable only against future house property income.
The computation runs in a fixed order, and the loss rules at the end decide most planning:
- Start with the rent received or receivable for the year.
- Subtract municipal taxes you actually paid during the year (not the tenant): what remains is the net annual value.
- Subtract 30% of that value as the standard deduction.
- Subtract the full home-loan interest, with no ceiling for a let-out property. The result, positive or negative, is your house property income.
How is pre-construction interest claimed?
First release year: regular interest ₹1,80,000 + fifth ₹60,000 = ₹2,40,000 claimed against the ₹2,00,000 cap
₹2,00,000 allowed (cap line) · ₹40,000 beyond it lapses for a self-occupied home
Nothing is deductible while the house is being built. Interest from the date of borrowing up to the 31 March before the tax year in which construction completes is pooled, and one-fifth of the pool is deducted in the completion year and in each of the next four years.
For a self-occupied home the fifth rides inside the ₹2 lakh cap along with the year's regular interest, so heavy pre-construction interest often exceeds the ceiling and simply lapses year by year. For a let-out property the fifths join the uncapped interest claim. Buyers who sell before possession never claim any of it.
What does the new regime allow?
The let-out allowance on the new regime is narrower than it looks: interest can wipe the rental income to zero, but the loss beyond that neither offsets other income nor carries forward. It simply lapses. For a self-occupied borrower the new regime offers nothing at all, which makes this section, with Sections 123 and 126, the core of the old-regime case.
| Treatment | Old regime | New regime |
|---|---|---|
| Interest on a self-occupied home | Up to ₹2,00,000 a year | Nothing |
| Interest on a let-out property | Uncapped | Allowed against that property's rent |
| House property loss against salary | Up to ₹2,00,000 a year | Not allowed |
| Unused loss carried forward | 8 years, against house property income | Not allowed |
Can you claim HRA and home-loan interest together?
Yes, when the facts are genuine. Own a flat in one city, work and rent in another, and the old regime allows the HRA exemption on the rent you pay alongside the Section 22 deduction on the home you own. The same works within one city where distance from the workplace or family needs justify renting.
What draws scrutiny is renting from a close relative next door to a vacant owned flat. Keep the rent agreement, actual bank-paid rent and the ownership story consistent; the HRA calculator linked below runs the exemption arithmetic.
What paperwork does the claim need?
- The lender's interest certificate splitting principal from interest: Section 22(4) makes it a condition of the ₹2 lakh cap, and it is the document employers ask for with Form 12BB.
- Completion or possession evidence (occupancy certificate, possession letter) to show the five-year condition is met and to date the pre-construction fifths.
- Municipal tax receipts in your name, paid within the year, for a let-out computation.
- For joint loans, the co-ownership deed and a record of who services what share of the EMI, since each claimant's deduction follows their actual share.
Should the home loan keep you on the old regime?
Run the arithmetic, because the answer flipped for many borrowers when new-regime slabs got cheaper. A self-occupied ₹2 lakh interest claim saves at most ₹62,400 a year at the 30% slab; the new regime's lower slab tax often gives back more than that, especially near the ₹12 lakh rebate zone where its tax is zero anyway.
The old regime tends to win for landlords with large interest bills using the ₹2 lakh loss set-off plus carry-forward, and for borrowers stacking this deduction with the Section 123 basket, Section 126 premiums and HRA. The home loan benefit calculator below compares both regimes on your exact loan.
Worked examples
Self-occupied flat, ₹2.6 lakh interest paid
Divya lives in the flat she bought on loan and pays ₹2,60,000 of interest in TY 2026-27. The self-occupied cap allows ₹2,00,000; the rest earns nothing. Her home's annual value is nil, so the deduction becomes a ₹2,00,000 house property loss set against her salary on the old regime, saving ₹62,400 at the 30% slab including cess. On the new regime the same interest would save zero.
Let-out house on the old and new regime
A house rents for ₹30,000 a month (₹3,60,000 a year) and the owner pays ₹20,000 municipal tax and ₹4,00,000 of loan interest. Net annual value ₹3,40,000, minus the 30% standard deduction of ₹1,02,000, minus interest: a loss of ₹1,62,000. Old regime: the full loss (under ₹2 lakh) offsets salary, saving ₹50,544 at the 30% slab with cess. New regime: interest stops at wiping the rent to nil and the ₹1,62,000 loss lapses.
Under-construction flat, interest released in fifths
Karan borrows in June 2023 and gets possession in February 2027, within five years. Interest paid up to 31 March 2026 totals ₹3,00,000: that pool releases at ₹60,000 a year for five years from TY 2026-27. That first year he also pays ₹1,80,000 of regular interest, so his claim is ₹1,80,000 plus ₹60,000, capped at ₹2,00,000 for a self-occupied home. ₹40,000 lapses, a squeeze that repeats every year the combined figure tops the cap.
Read the section as enacted
The statutory text is loaded verbatim from the Gazette copy of the Income-tax Act 2025, never from secondary sources or memory. This section's text is in the verification queue; the CA-checked copy appears here the moment it clears.
Section 22 FAQs
Can both spouses claim ₹2 lakh each on a joint home loan?
Yes, if both are co-owners of the house and co-borrowers actually servicing the loan. Each claims interest up to their own ₹2,00,000 self-occupied cap in proportion to their share, so a couple can deduct up to ₹4 lakh on one property. A co-borrower who is not a co-owner claims nothing.
Can I claim the principal repayment too?
Yes, but under a different section: principal and stamp duty go into the Section 123 basket (the old 80C) within its ₹1.5 lakh cap, while interest sits here. Both are old-regime claims, and they run together for most borrowers.
If I sell the house, are past interest deductions reversed?
No. The five-year clawback on selling applies to principal claimed under Section 123, not to interest. Interest already deducted under this section stays deducted whenever you sell.
My flat is still under construction. Can I claim the interest I am paying now?
Not yet. Interest up to the 31 March before the completion year accumulates and comes back in five equal instalments starting in the tax year construction completes. If you sell before possession, the accumulated interest is never claimed.
What if construction takes longer than five years?
The self-occupied cap collapses from ₹2,00,000 to ₹30,000, a brutal penalty on delayed projects. The five years run from the end of the tax year in which you borrowed. For a let-out property the interest stays uncapped regardless, since the caps attach only to self-occupied homes.
I own three houses. How are they treated?
Two can be claimed as self-occupied with nil annual value (sharing one ₹2 lakh interest ceiling); the third is deemed let-out, taxed on notional market rent, with uncapped interest and the 30% standard deduction against it.†
Do the extra interest deductions under 80EE and 80EEA still exist?
Both were closed to new loan sanctions years ago; borrowers whose loans were sanctioned inside those windows keep claiming until the loan ends. How the 2025 Act houses these run-off claims is in our verification queue.†
Is interest paid to a foreign lender deductible?
Only if Indian tax was deducted at source on it or the lender has an agent in India assessable to tax: Section 22(6) carries this bar over from the old law. NRI borrowers repaying overseas relatives trip on this more than any other group.