Section 24 Guide: Save Tax on your House Property (2025-26)

If you own a house in India, the tax department doesn't just look at the rent you collect; they also give you a way to offset the costs of owning and maintaining that home. Section 24 is the part of the Income Tax Act that handles deductions specifically for Income from House Property. Whether you are a landlord collecting monthly rent or a homeowner paying off a steep home loan, Section 24 is your primary tool for lowering your taxable income. For the financial year 2025-2026, understanding these rules is vital, especially since the choice between the Old and New tax regimes completely changes what you can claim.

The Two Main Pillars of Section 24

There are two specific ways you can save tax under this section. One is a flat gift from the government, and the other depends on your home loan.

A. Section 24(a): The Standard Deduction (The 30% Rule)

The government knows that houses need repairs, painting, and general upkeep. Instead of asking you to produce every single receipt for a plumber or a painter, they allow a flat 30% deduction from your Net Annual Value (NAV).

• How it works: If your net rental income after paying property tax is ₹1,00,000, you can automatically deduct ₹30,000 as a standard deduction.
• The Best Part: You get this even if you spent zero rupees on repairs this year!
• Note: This only applies to Let-out (rented) or Deemed Let-out properties. For a house you live in (self-occupied), the NAV is zero, so this deduction doesn't apply.

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B. Section 24(b): Interest on Home Loan

This is the big one for most homeowners. You can deduct the interest portion of your home loan EMI from your income.

• Self-Occupied Property: You can deduct up to ₹2,00,000 per year.
• Let-out Property: There is no upper limit on the interest you can claim! You can deduct the entire interest paid against your rental income.

Calculating Your House Property Income

To find out what you actually pay tax on, follow these simple steps:

1. Gross Annual Value (GAV): The total rent you received during the year.
2. Subtract Municipal Taxes: Deduct the actual property tax you paid to the local body (like BMC or MCD).
3. Result = Net Annual Value (NAV): This is your base for tax.
4. Subtract 30% Standard Deduction [Section 24(a)]: Take 30% off the NAV.
5. Subtract Home Loan Interest [Section 24(b)]: Deduct the interest paid for that year.
6. Final Result: This is your taxable Income (or Loss) from House Property.

The 2025-26 Regime Clash: Old vs. New

This is where you need to be careful. Your choice of tax regime in 2025 dictates whether Section 24 helps you or not.

• Old Tax Regime: You get all benefits, the 30% standard deduction, and the ₹2 Lakh interest deduction for your own home.
• New Tax Regime (Default): For your own home (Self-Occupied): You get zero deduction for interest.
  • For Rented Property: You still get the 30% standard deduction and can deduct interest, but only to the extent that it wipes out your rental income. You cannot use a loss from your house to lower your salary tax.

Special Rules and Conditions

• The 5-Year Rule: To claim the full ₹2 Lakh interest deduction, the construction or purchase of your house must be completed within 5 years from the end of the year you took the loan. If it takes longer, your limit drops to just ₹30,000.
• Pre-Construction Interest: Paid interest while the house was still being built? You can claim that total amount in 5 equal installments starting from the year the construction is finished.
• Repairs and Renovation: If you took a loan just for repairs or painting (not buying), the maximum deduction is capped at ₹30,000 even in the Old Regime.

Summary Table: Section 24 at a Glance

Feature

Self-Occupied Home

Rented (Let-out) Property

Standard Deduction (30%)

Not Applicable

Available

Home Loan Interest Limit

₹2,00,000 (Old Regime)

No Limit

Interest on Repairs

₹30,000

Actual Interest

New Tax Regime (2025)

No interest deduction

Only against rental income

Conclusion

Section 24 is a fantastic way to make homeownership and landlording more affordable. The 30% standard deduction is a gift that rewards you for being a property owner, regardless of your actual expenses. However, as the New Tax Regime becomes more common in 2025-26, the big ₹2 Lakh interest benefit for homeowners is slowly fading away for many. If you have a large home loan, it is often worth doing a quick calculation with a Motilal Oswal advisor to see if the Old Regime’s Section 24 benefits save you more than the New Regime’s lower slabs.