AY 2026-27 Home Loan Interest Checklist for Self-Occupied House
The deduction on home loan interest for a self-occupied property is one of the more misunderstood entries in an ITR. Under the old tax regime, section 24(b) of the Income Tax Act 1961 allows a deduction of up to ₹2 lakh per year on interest paid on a loan taken to acquire or construct a self-occupied house. The new tax regime, which is the default for AY 2026-27, does not permit this deduction. Before you claim it, therefore, you need to be certain which regime you are under — and you need your interest certificate in hand, not just a rough figure from memory.
This guide is for FY 2025-26 income being prepared for AY 2026-27. It walks through the conditions, the documents, and the verification steps that actually matter.
The three conditions that must all be true
Home loan interest on a self-occupied property is deductible only when all of the following apply:
- The property is self-occupied during FY 2025-26 — not rented out, not vacant-for-income purposes.
- The loan was taken from a recognised financial institution (bank, housing finance company, or specified lender) for acquisition or construction, not for repair or renovation if you intend to claim the full ₹2 lakh limit.
- Construction was completed within five years from the end of the financial year in which the loan was taken. If it was not, the deduction cap drops to ₹30,000.
If any of these conditions is doubtful in your case, that is the first thing to clarify — not the interest amount.
Pre-filing checklist
Work through these before opening the ITR form:
- Confirm you have opted for the old tax regime for AY 2026-27. The deduction under section 24(b) is not available under the new regime.
- Get the annual interest certificate from your lender for FY 2025-26. This is the only reliable figure — do not rely on your EMI schedule alone, since it may not split principal and interest in the same way.
- If the property is jointly owned, determine each co-owner's share. The ₹2 lakh cap applies per borrower, not per property, so co-borrowers on the same loan can each claim up to ₹2 lakh provided they are also co-owners.
- Check your Form 16 if you are salaried. Many employers already account for this deduction in the TDS computation. Verify the figure in Part B of Form 16 against your actual interest certificate.
- Confirm possession date. The five-year construction completion rule is calculated from the end of the FY in which the loan was first disbursed.
Documents to keep ready
| Document | Why it matters |
|---|---|
| loan interest certificate | Issued by your lender for FY 2025-26; shows exact interest paid, which you enter in the ITR under section 24(b). |
| property ownership proof | Establishes that you are the owner or co-owner; needed to support the deduction claim if a notice is raised. |
| Form 16 | Check Part B to see whether your employer already factored in the interest deduction while computing TDS. |
| regime comparison | A simple spreadsheet showing tax under old versus new regime helps confirm the old regime is genuinely beneficial for your case. |
| PAN and bank details | Required for refund credit and identity matching across AIS, Form 26AS, and the return. |
| A short review note | Note what was verified — interest amount, regime chosen, co-borrower share if applicable, and any mismatch found. |
Practical example
A salaried individual with a home loan on a flat purchased in FY 2019-20 wants to claim interest for FY 2025-26. The annual interest per the certificate is ₹1.85 lakh. Construction was completed in FY 2021-22, which is within five years of the loan start, so the ₹2 lakh cap applies. The individual is under the old regime, having explicitly opted out of the new regime when submitting Form 10-IEA through the employer. Part B of Form 16 already reflects ₹1.85 lakh as the section 24(b) deduction. The individual confirms this matches the interest certificate and files accordingly.
Had the individual not opted out of the new regime, the deduction would be nil regardless of what the lender's certificate shows.
Official source baseline
| Source | Link |
|---|---|
| Income Tax Department - AY 2026-27 ITR utilities | Open source |
| Income Tax Department - Income Tax Returns FAQs | Open source |
| Income Tax Department - Salaried Individuals AY 2026-27 | Open source |
| Income Tax Department - Annual Information Statement | Open source |
| Income Tax Department - Tax Credit Mismatch FAQs | Open source |
MyeCA workflow
Use Form 16 parser to extract and verify the figures in your Form 16, then use Get Expert Tax Review if you are dealing with a joint loan, a partly-constructed property, or a regime-switch situation. For related reading:
Reviewer notes for home loan borrowers
A CA or reviewer examining this file should confirm: the regime is correctly identified and documented, the interest figure in the return matches the lender's certificate for FY 2025-26, the property's occupation status is self-occupied, the construction-completion timeline has been checked where there is any doubt, and joint borrower deduction splits have been reviewed if applicable. Any mismatch between Form 16 and the interest certificate should be noted and resolved before filing.
Frequently asked questions
Is this article a substitute for professional advice?
No. Use it as an educational checklist and get case-specific review where documents, income heads, or eligibility are unclear.
Which year does this AY 2026-27 guide cover?
AY 2026-27 generally relates to FY 2025-26 income, subject to the facts of the taxpayer and official filing utility rules.
What should I check before filing?
Check the ITR form, tax regime, AIS, Form 26AS, TDS certificates, bank details, and the documents supporting the income or deduction.
Final takeaway
The ₹2 lakh section 24(b) deduction is worth checking carefully, but it only works if you are under the old regime and your documents are clean. Get the interest certificate from your lender, confirm the possession timeline, and cross-check against Form 16 before you enter the figure in the ITR.