Can I still claim home loan interest under the new tax regime if I rent out the flat?

Published 29 September 2026

Nripesh from Kolkata

I am buying a flat with a home loan.

The annual interest will be around Rs 2L.

I know the new tax regime removed the home loan benefit for self-occupied homes.

But what if I rent it out for about Rs 3.5L a year? Can I offset the interest then?

Mohan Gupta Co-founder Foliyo AI, NISM Series X-A, X-B, XXI-A Certified LinkedIn

You can absolutely claim home loan interest deductions under the new tax regime if the property is rented out, as the rules allow you to offset expenses against rental income. The new regime only removed the interest deduction for self-occupied properties. When you earn rental income, the government treats it as taxable income but allows specific deductions first.

In your case, you start with your annual rental income of Rs 3.5L. The rules give you a flat 30% standard deduction on this rent for property maintenance. That 30% deduction wipes out Rs 1.05L right off the top.

Then, you are allowed to deduct the Rs 2L you pay in home loan interest for that specific property. After subtracting both the standard deduction and the interest, your taxable rental income drops to just Rs 45,000. You will only pay tax on that minimal Rs 45,000 amount at your applicable slab rate.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.

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