New regime slashes major housing tax breaks: What every property owner must know now
Taxable income from house property is computed by subtracting municipal taxes, applying a 30% standard deduction, and factoring in loan interest.
- Jul 28, 2025,
- Updated Jul 28, 2025 7:48 AM IST
Over 60 lakh taxpayers claimed nearly ₹78,000 crore in housing-related losses in FY23—a benefit that could vanish as most shift to the new tax regime, warns TaxBuddy.com founder Sujit Bangar.
In a recent LinkedIn post, Bangar flagged that with 95-97% of taxpayers expected to opt for the new tax regime, deductions under the “income from house property” head—once a popular tool for tax savings—are at risk of becoming obsolete.
Bangar noted that under the old regime, losses up to ₹2 lakh from interest on housing loans could be set off against other income.
This benefit is gone under the new system, except in cases where the property is let out and still results in a net loss.
He broke down the taxation rules: self-occupied homes (up to two) have a Gross Annual Value (GAV) of nil. If more than two are owned, the extras are treated as “deemed let-out,” with GAV calculated based on expected market rent. For actual rentals, the higher of municipal value, fair rent, or actual rent is considered GAV.
Taxable income from house property is computed by subtracting municipal taxes, applying a 30% standard deduction, and factoring in loan interest. While these deductions remain under both regimes, critical set-offs like those under Section 80C for principal repayment are now exclusive to the old regime.
Bangar also clarified tax treatment for rent payments above ₹50,000 per month—triggering 2% TDS under Section 194-IB, even for individuals and HUFs not running businesses.
Joint home loan holders also stand to lose. While each co-owner and co-borrower can claim deductions for interest (₹2 lakh) and principal (₹1.5 lakh) under the old regime, these perks don’t carry over under the new rules.
Over 60 lakh taxpayers claimed nearly ₹78,000 crore in housing-related losses in FY23—a benefit that could vanish as most shift to the new tax regime, warns TaxBuddy.com founder Sujit Bangar.
In a recent LinkedIn post, Bangar flagged that with 95-97% of taxpayers expected to opt for the new tax regime, deductions under the “income from house property” head—once a popular tool for tax savings—are at risk of becoming obsolete.
Bangar noted that under the old regime, losses up to ₹2 lakh from interest on housing loans could be set off against other income.
This benefit is gone under the new system, except in cases where the property is let out and still results in a net loss.
He broke down the taxation rules: self-occupied homes (up to two) have a Gross Annual Value (GAV) of nil. If more than two are owned, the extras are treated as “deemed let-out,” with GAV calculated based on expected market rent. For actual rentals, the higher of municipal value, fair rent, or actual rent is considered GAV.
Taxable income from house property is computed by subtracting municipal taxes, applying a 30% standard deduction, and factoring in loan interest. While these deductions remain under both regimes, critical set-offs like those under Section 80C for principal repayment are now exclusive to the old regime.
Bangar also clarified tax treatment for rent payments above ₹50,000 per month—triggering 2% TDS under Section 194-IB, even for individuals and HUFs not running businesses.
Joint home loan holders also stand to lose. While each co-owner and co-borrower can claim deductions for interest (₹2 lakh) and principal (₹1.5 lakh) under the old regime, these perks don’t carry over under the new rules.