# Tax Benefits on Home Loans for NRIs Author: Ankur Choudhary Author URL: https://getbelong.com/blog/author/ankur-choudhary/ Published: 2026-09-30 Category: NRI Finances Category URL: https://getbelong.com/blog/category/nri-finances/ Meta Title: Tax Benefits on Home Loans for NRIs Meta Description: Tax benefits on home loans for NRIs: interest and principal deductions, let-out vs self-occupied rules, new regime limits and the Income-tax Act 2025. Tags: Home Loans Tag URLs: Home Loans (https://getbelong.com/blog/tag/home-loans/) URL: https://getbelong.com/blog/nri-home-loans/tax-benefits/ ![featured-1790740930608-1790740931216.png](https://prod.superblogcdn.com/site_cuid_clx4a3rx6000caheo10zipfw1/images/featured-1790740930608-1790740931216-compressed.png) On 1 April 2026, India's income tax law changed its name, its structure and its section numbers. The old Income-tax Act, 1961 is gone. For NRIs with home loans, that raised an anxious question. Do the familiar tax benefits still exist? The short answer is yes, in substance. The CBDT's [press release on the new Act](https://www.incometaxindia.gov.in/documents/d/guest/press-release-income-tax-act-2025-comes-into-force-from-01-april-2026-pdf) says it simplifies the law without altering the underlying tax policy. But the bigger question for NRIs was never the section number. It is whether you can use the benefit at all. This guide explains who benefits, how, and when the benefit is worth nothing. It is part of our [NRI home loans](https://getbelong.com/blog/nri-home-loans/) cluster. In the [Belong](https://getbelong.com/) community, this is where we see the most confident mistakes. People assume a deduction exists for them because it exists in general. ## The Short Answer NRIs can claim home loan tax benefits in India, much like residents. These include deductions for interest and, under the old regime, for principal repayment. HDFC's [NRI home loan explainer](https://homeloans.hdfc.bank.in/blog/home-finance/home-loans-for-nris) confirms NRIs can claim these deductions if they file Indian tax returns. The catch is simple. A deduction only reduces tax on Indian taxable income. If you have none, the deduction has nothing to reduce. 👉 **Tip:** Before counting on tax benefits, list your Indian taxable income for the year. If the list is empty, plan your loan at its full interest cost. ## A Note on Section Numbers Most banks, calculators and articles still use the familiar labels. "Section 24(b)" for interest, and "Section 80C" for principal. These labels come from the 1961 Act. Under the Income-tax Act, 2025, the provisions have new numbers. We use the familiar labels in this guide because readers and lenders still use them. For income from April 2026 onwards, confirm current numbering on the [Income Tax Department website](https://www.incometaxindia.gov.in/w/income-tax-act-2025-comes-into-force-from-1st-april-2026) or with a tax professional. ## Who Actually Benefits: The NRI Reality Check Here is what most blogs miss. They explain deductions as if every reader has Indian salary. Most NRIs earn abroad. Their foreign salary is generally not taxed in India, so it cannot absorb an Indian deduction. Our guide to [types of taxable income for NRIs](https://getbelong.com/blog/types-of-taxable-income-for-nris/) explains what India does tax. Rent, interest on NRO deposits, capital gains and Indian business income are common examples. Your Indian income situation Can home loan deductions help? What this means No Indian taxable income No real benefit Judge the loan at its full interest cost Rent from the home with the loan Yes, interest reduces taxable rent The loan's effective cost falls Rent from a different property Possibly, depending on the rules Check how set-off works for your case Other Indian income, like NRO interest Possibly, within limits Depends on regime and property type Joint owner with resident co-borrower Your share only Your co-owner may benefit more Unsure whether you need to file? Start with our guide on [who needs to file income tax in India](https://getbelong.com/blog/who-needs-to-file-income-tax-in-india/). ## Benefit One: Deduction for Interest Interest is the largest part of your EMI in the early years. That is how [amortization](https://getbelong.com/blog/amortization-meaning/) works on a home loan. The Income Tax Department's [house property guide](https://incometaxindia.gov.in/Documents/Left%20Menu/Ind-income-from-house-property.htm) explains how interest on borrowed capital is deducted. The treatment depends on how the property is used. ### If the Home Is Let Out Rent is taxed under income from house property. From the rent, you deduct municipal taxes paid, a flat standard deduction, and interest on the loan. The let-out case does not carry the same interest cap as a self-occupied home. That makes it the most useful case for many NRIs. If interest exceeds rent after other deductions, you get a house property loss. Limits apply on setting off that loss against other income, with the rest carried forward. Our guide to [tax on rental income for NRIs](https://getbelong.com/blog/tax-on-rental-income-for-nris/) covers the rent side in detail. ### If the Home Is Self-Occupied A self-occupied home has nil annual value for tax. Only the interest deduction applies, and it is capped under the old regime. The Income Tax Department's guide says interest on self-occupied homes is allowed for more than one property, within a limit. The aggregate deduction across those homes shares one cap. ### The NRI Case: Empty Because You Work Abroad This one matters for many NRIs. Your flat in India may sit empty because your job is in Dubai or London. The Income Tax Department's guide covers a home the owner cannot occupy because of employment elsewhere. It is treated much like a self-occupied home, with nil annual value and capped interest deduction. So an empty flat does not automatically create taxable notional rent. But the capped interest deduction is only useful if you have other Indian income to set it against. ### Interest Before Possession For under-construction homes, you pay interest before you get the keys. That interest is not lost. The Income Tax Department's [FAQs on house property](https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs+on+Income+from+house+property) explain that pre-construction interest is allowed in equal instalments. These start from the year construction completes. Keep every year's interest certificate, even before possession. You will need the full history to claim this correctly. 👉 **Tip:** Ask your lender for interest certificates every April, including during construction. Missing years are hard to reconstruct later. ### Completion Timelines Matter For self-occupied homes, the full interest deduction depends on construction completing within a set period. Delays beyond that can reduce the deduction. Under-construction delays are common in India. Factor this into your tax expectations, not just your move-in plans. ## Benefit Two: Deduction for Principal Repayment Principal repayment can count towards the deduction commonly known as Section 80C. HDFC's explainer confirms NRIs can claim it, subject to conditions. That deduction shares one overall cap with other eligible items. If you already use it for other investments, your home loan adds little. This deduction is available only under the old regime. It also needs Indian taxable income to be useful. Our guide to [NRI tax exemptions and deductions](https://getbelong.com/blog/nri-tax/exemptions-deductions/) lists what else competes for the same cap. ## Old Regime vs New Regime This choice can decide whether your home loan saves you any tax at all. The Income Tax Department's [FAQ on new vs old regimes](https://www.incometax.gov.in/iec/foportal/help/new-tax-vs-old-tax-regime-faqs) confirms the key point. Under the new regime, interest on self-occupied property is not deductible. Benefit Old regime New regime Interest on self-occupied home Deductible, within a cap Not deductible Interest on let-out home Deductible against rent Deductible against rent, subject to rules Principal repayment Within the shared deduction cap Not available Pre-construction interest In equal instalments after completion Follows the same property-type rules The new regime has lower rates but fewer deductions. The old regime keeps deductions but taxes at higher rates. Run both calculations every year. The better regime can change as your income, rent and loan balance change. ### A Common Trap We often see NRIs pick the new regime by default, then claim self-occupied interest anyway. The claim fails at processing, and a notice may follow. Check the regime rules before you file. Our guide to common [NRI tax filing mistakes](https://getbelong.com/blog/nri-tax/filing-mistakes/) covers this and other errors. ## Joint Loans and Co-Owners Many NRIs borrow and own jointly with a spouse or parent. Tax benefits then follow ownership shares. The Income Tax Department's guide says co-owners with definite, ascertainable shares are assessed separately. Each can claim self-occupied benefits on their share, subject to conditions. This creates planning room. A resident co-owner with Indian salary may benefit from deductions more than an NRI co-owner with no Indian income. Write ownership shares clearly in the sale deed. "Jointly owned" without shares weakens your tax position. ## Rent, TDS and Your Tax Return Rent is the most common reason NRIs have Indian taxable income. It is also where home loan deductions do the most work. Your tenant usually deducts TDS on rent paid to an NRI landlord. Loan interest then reduces your actual taxable rent, often below what the TDS assumed. The gap can create a refund. You only get it if you file a return. ### Where Rent Should Land Rent is Indian income, so it belongs in your NRO account. You can use it to pay EMIs from there. Our comparison of [NRE vs NRO accounts for EMIs](https://getbelong.com/blog/nri-home-loans/nre-vs-nro-account/) shows how to split rent and salary cleanly. Our guide to [paying EMIs as an NRI](https://getbelong.com/blog/nri-home-loans/emi-payment/) covers the setup. ### Check Your AIS Before Filing Your Annual Information Statement shows TDS, interest and other income the department already knows about. Mismatches cause notices. Our guide on how to [check your AIS before filing](https://getbelong.com/blog/check-ais-before-filing-itr/) walks through it. Use it with your interest certificate and rent records. ### Which Form to Use The right return form depends on your income types. Business income usually changes the form you need. Form names and numbers may change under the new Act. Check the portal each year before you file. ## Tax in Your Country of Residence India is only half the picture. Your host country may tax your worldwide income, including Indian rent. A double taxation agreement usually decides which country taxes what, and how credits work. Our guides on [avoiding double taxation](https://getbelong.com/blog/nri-tax/avoid-double-taxation/) and the [India-UAE DTAA](https://getbelong.com/blog/dtaa/india-uae/) explain the basics. An Indian home loan deduction does not automatically apply abroad. Some countries allow mortgage interest relief, others do not. If you live in a country that taxes worldwide income, speak to an adviser who understands both systems. ## When Your Residential Status Changes Your tax position on the same loan can change completely when you move. ### If You're an NRI Returning to India Once you become resident, Indian salary and other income become taxable here. Suddenly, home loan deductions have income to reduce. Returning NRIs may pass through RNOR status first. Our explainer on [NRI, RNOR and resident tax status](https://getbelong.com/blog/nri-vs-resident-vs-rnor-tax-status-changes/) shows how the transition works. This is a good moment to rerun the old versus new regime comparison. The answer may flip. ### If You're a Resident Indian Moving Abroad If you're a resident with a home loan moving abroad, the reverse happens. Your Indian salary stops, and your deductions may lose their value. Consider whether prepayment now makes more sense than before. Without a tax benefit, your loan costs you its full rate. ## Should Tax Benefits Decide Your Loan Size? For most NRIs, no. Tax benefits are a bonus, not a reason to borrow. A deduction saves only a fraction of what you pay in interest. You still pay the rest, every year. Borrowing more "for the tax benefit" is one of the costliest myths we see. Size the loan on [eligibility](https://getbelong.com/blog/nri-home-loans/eligibility/) and comfort instead. The [opportunity cost](https://getbelong.com/blog/opportunity-cost-meaning/) of extra interest usually outweighs the tax saved. ### Your Effective Interest Rate Think of your after-tax [interest rate](https://getbelong.com/blog/interest-rate-meaning/) as the real cost of borrowing. If you get no deduction, it equals your loan rate. If deductions reduce your tax, your effective rate is lower. Compare that effective rate with what your money could earn elsewhere, after tax. This comparison drives the prepay-or-invest decision. It changes as your income and regime change. ## Keeping the Rest of Your Money Working Your home loan decisions sit inside a wider plan. The pieces should support each other. Money set aside for prepayments should stay safe. Compare deposit options on our [NRI FD rates tool](https://getbelong.com/tools/nri-fd-rates/). Our guide on [down payments for NRIs](https://getbelong.com/blog/nri-home-loans/down-payment/) explains how to plan the upfront cash. Want to keep prepayment money in dollars until you use it? [USD fixed deposits in GIFT City](https://getbelong.com/products/usd-fixed-deposits/) let you choose when to convert. For long-term money, compare dollar-denominated funds on our [GIFT City mutual funds tool](https://getbelong.com/tools/gift-city-mutual-funds/). You can invest through [Belong](https://getbelong.com/) on our [mutual funds platform](https://getbelong.com/products/mutual-funds/). Examples include the [DSP Global Equity Fund](https://getbelong.com/tools/gift-city-mutual-funds/dsp-global-equity-fund/) and the [Tata India Dynamic Equity Fund](https://getbelong.com/tools/gift-city-mutual-funds/tata-india-dynamic-equity-fund/). Others include the [Sundaram India Mid Cap Fund](https://getbelong.com/tools/gift-city-mutual-funds/sundaram-india-mid-cap-fund-gift/) and the [Edelweiss Greater China Equity Fund](https://getbelong.com/tools/gift-city-mutual-funds/edelweiss-greater-china-equity-fund/). These carry market risk. Keep loan money away from [GIFT City IPOs](https://getbelong.com/blog/ipo/gift-city-ipo/), [IPO investing](https://getbelong.com/products/ipo/) and [futures and options](https://getbelong.com/products/futures-and-options/). Their tax treatment and risks differ sharply from a home loan. Our [GIFT Nifty tracker](https://getbelong.com/tools/gift-nifty/) shows early market signals if you invest a lump sum. Larger investors can explore [GIFT City alternative investment funds](https://getbelong.com/tools/gift-city-alternative-investment-funds/), which carry higher minimums. GIFT City services at [Belong](https://getbelong.com/) are regulated by IFSCA. You can review our registrations on the [licences page](https://getbelong.com/licenses/). ### Getting Help With Filing Home loan deductions, rent, TDS and regime choice make NRI returns more complex. The [Belong](https://getbelong.com/) team can help through our [NRI tax filing service](https://getbelong.com/services/tax-filing/). Keep your interest certificates with the rest of your loan file. Our [NRI home loan documents](https://getbelong.com/blog/nri-home-loans/documents/) checklist shows what else to keep. ## Your Decision Block - If you have no Indian taxable income, ignore tax benefits when sizing your loan. - If your flat is let out, claim interest against rent and file a return every year. - If your flat is empty because you work abroad, check how the employment rule applies to you. - If you are buying under construction, collect interest certificates from the first year. - If you co-own with a resident, match ownership shares to who benefits most, carefully. - If you are returning to India, rerun the regime comparison before your first resident year. ## Frequently Asked Questions ### Can NRIs claim tax benefits on home loans in India? Yes. NRIs can claim interest and, under the old regime, principal deductions, if they file Indian returns. Benefits only help if you have Indian taxable income. ### Do home loan tax benefits still exist under the Income-tax Act, 2025? The CBDT says the new Act simplifies the law without changing the underlying tax policy. Section numbers have changed, so confirm current references before filing. ### Can I claim interest deduction under the new tax regime? Not for a self-occupied home. The Income Tax Department confirms this. Interest on a let-out property is treated differently. ### Is my empty flat in India taxed on notional rent while I work abroad? The Income Tax Department treats a home you cannot occupy due to employment elsewhere much like a self-occupied home. Conditions and limits apply. ### Can joint owners both claim home loan deductions? Co-owners with definite shares are assessed separately. Each can claim benefits on their share, subject to conditions. Confirm details with a tax professional. ## Sources - CBDT, [Press release: Income-tax Act, 2025 comes into force](https://www.incometaxindia.gov.in/documents/d/guest/press-release-income-tax-act-2025-comes-into-force-from-01-april-2026-pdf). - Income Tax Department, [Income-tax Act, 2025 announcement page](https://www.incometaxindia.gov.in/w/income-tax-act-2025-comes-into-force-from-1st-april-2026). - Income Tax Department, [Income from House Property guide](https://incometaxindia.gov.in/Documents/Left%20Menu/Ind-income-from-house-property.htm). - Income Tax Department, [FAQs on Income from House Property](https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs+on+Income+from+house+property). - Income Tax Department, [FAQs on New vs Old Tax Regime](https://www.incometax.gov.in/iec/foportal/help/new-tax-vs-old-tax-regime-faqs). - HDFC Bank, [Home Loans for NRIs explainer](https://homeloans.hdfc.bank.in/blog/home-finance/home-loans-for-nris). ## Disclaimer This guide is for general education only. It is not tax or legal advice for your situation. Tax law has changed with the Income-tax Act, 2025, and rules, limits and section numbers may continue to evolve. Confirm current rules on the Income Tax Department website, and consult a qualified professional before filing. Mentions of specific funds or products are examples, not recommendations. Investments carry risk, including possible loss of capital. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---