Tax benefit calculator

By Anchal Katyal · Written on Jul 3, 2026 · Verified on Sep 21, 2026

Estimate Year-1 home loan tax savings under the old and new regimes, from interest (Section 22) and principal (Section 123). Fit the EMI to your budget first.

What you'll learn:

Why the new regime saves nothing
Rules for a let-out property
Claims when co-owners share a loan

Tax Benefit

Currency: ₹INR

Estimated tax saved-

Year-1 interest-

Year-1 principal-

Interest claimed-

Principal claimed-

Old regime saves-

New regime saves-

From interest (Sec 22)-

From principal (Sec 123): -

Enter loan details to estimate Year-1 tax benefit.

What this tool shows

This home loan tax benefit calculator estimates Year-1 deductions from interest (Section 22 of the Income-tax Act, 2025, previously 24(b)) and principal repayment room under Section 123 (previously 80C), then applies your marginal slab to show approximate tax saved.

It is a planning model from the amortization schedule, not a filing engine. Regime choice, property use, and other Section 123 investments change the result more than EMI alone.

Use it after you have sized cash EMI on the home loan EMI calculator. Tax savings should never be the only reason to take a larger house loan.

How to use this tool

Enter loan amount, rate, and tenure. The tool estimates Year-1 interest and principal from a standard reducing-balance home loan schedule.
Set your marginal tax slab (for example 20 or 30) so savings reflect your band, not a generic rate.
Enter how much of the ₹1.5 lakh Section 123 limit is already used by EPF, PPF, ELSS, insurance, or other eligible items.
Toggle Old vs New regime and self-occupied vs let-out to see deductible amounts and estimated tax saved.
Re-run after a large prepayment or rate reset, because Year-1 interest and principal shares move when the schedule changes.

How Section 22 and 123 interact with regime choice

Under the Old regime, self-occupied interest deduction under Section 22 is commonly capped at ₹2 lakh per year. Principal repayment can use leftover Section 123 room within the shared ₹1.5 lakh limit.

The New regime generally does not allow these home-loan deductions for a typical self-occupied case. The tool shows that contrast so you do not assume home loan EMI interest is always tax-advantaged.

Let-out property follows different interest rules. This estimate lifts the self-occupied ₹2 lakh cap for let-out interest under Old-regime planning, but your CA still needs to apply current law to your facts.

Joint loans and co-ownership can split interest and principal claims. Enter only the share that belongs to the person whose slab you are modelling.

A larger house loan can raise the interest claim while also raising cash EMI. Always check affordability and loan eligibility before chasing a bigger Section 22 claim.

Decision tips

Use the numbers to compare regimes and loan size, then confirm with a qualified CA before you file or restructure.

Tax rules last verified for tax year 2026-27, under the Income-tax Act, 2025, which replaced the 1961 Act from 1 April 2026. Limits are unchanged; only the section numbers moved.
Authoritative reference: the Income-tax Act, 2025 as amended by the Finance Act, 2026 (incometaxindia.gov.in), and the Government's 1 April 2026 press release on the new Act (pib.gov.in).
Self-occupied interest deduction under Section 22 (old 24(b)) is capped at ₹2 lakh per year in the old regime.
Section 123 (old 80C) is shared with EPF, PPF, ELSS, life insurance, and principal repayment.
New regime (Section 202, old 115BAC): assume no self-occupied home-loan benefit unless your CA confirms an exception.
The old 80EEA affordable-housing deduction (now Section 131) is closed to loans sanctioned after 31 March 2022.
Prepaying principal can raise Section 123 usage early, but interest deduction falls as outstanding shrinks: model both effects over time.
Keep bank interest and principal certificates handy; the return needs those, not this screen.

What this estimate leaves out

Municipal taxes, house rent set-off, and other income-head adjustments are outside this model. A let-out case in particular can change once your CA applies current set-off rules.

Year-1 is usually the most interest-heavy year. If you are deciding whether Old regime still pays for itself in year five or ten, re-run with the outstanding principal and remaining tenure from that future point.

If most of your Section 123 limit is already used, principal repayment may add little tax savings even when the EMI is large. Lower the leftover Section 123 input and watch the tax-saved figure fall before you borrow more just to chase a deduction.

Pair this screen with the home loan EMI calculator and prepayment tools when you are choosing loan size: a smaller loan can reduce interest paid even when it also reduces the Section 22 claim.

A higher slab rate makes Old-regime deductions look more valuable in rupee terms, but only if you actually stay in that band after exemptions and other income. Model the slab you expect to file in, not a higher slab from a job offer that has not started.

Under-construction interest may be treated differently from ready-property interest for the years before possession. This tool estimates Year 1 for a ready property, so it cannot plan the years of a long construction schedule; ask your CA how pre-possession interest is claimed in your case.

If you and a co-borrower split the EMI, do not enter the full loan here for one person and again for the other. Split principal and interest in the same ratio you will claim, then run the tool once per taxpayer.

Tax savings never repay a loan that is too large for your cash flow. If the home loan EMI already strains FOIR, shrinking the loan usually beats chasing a larger Section 22 claim that still leaves you short each month.

When Old and New regime tax-saved figures are close, include the rest of your return (standard deduction patterns, other investments, employer benefits) before you pick a regime for the year. Home-loan math is only one block of that choice.

Last updated on Aug 18, 2026.

FAQs

Is this official tax advice?

No. It is a planning estimate from the amortization schedule. Confirm with a qualified CA and the current Finance Act before you file or change your loan structure.

Why is New regime tax saved zero?

For typical self-occupied home loans, the new regime does not allow Section 22 or 123 deductions. The tool shows that contrast so Old-regime tax savings are not assumed under the New regime.

What about let-out property?

Interest deductibility rules differ for let-out properties. The tool lifts the ₹2 lakh self-occupied cap for let-out interest in the Old regime estimate. Still verify set-off rules and current law with your CA.

Does Year-1 match every year of the loan?

No. Early years are interest-heavy, so Year-1 interest (and Section 22 usage) is usually higher than later years. Re-run with remaining principal and tenure as the loan ages.

Can co-owners both claim deductions?

Only when each person is an owner, is liable for repayment, and actually pays their share. Limits apply per eligible claimant under the conditions of the chosen regime.

Should tax savings decide my loan amount?

No. Afford the full home loan EMI first. Tax benefits reduce taxable income under specific rules; they do not lower the bank debit. Use this tool after the loan already fits your budget.