AssetC Property Management

17/12/2025

RULES AIM TO END SUDDEN
One of the most significant clarifications under the updated tenant rights is protection from forced eviction before the agreed tenure ends. In practical terms, a landlord cannot demand that a tenant vacate the property mid-contract unless specific conditions such as prolonged non-payment of rent or misuse of the premises are proven. Even then, a minimum notice period of 15 days is mandatory.

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This shift could reshape India’s mortgage ecosystem. Financial institutions are moving towards real-time verification models, where land ownership is cross-checked digitally before approvals. According to financial analyst Kavita Rao, “Mutation has effectively become the backbone of collateral credibility. Without it, even a legally registered property may struggle to unlock its financial value.” Over time, this could improve credit discipline while reducing fraud-related litigation.

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Can home loan interest reduce your capital gains tax in the new tax regime? Explained
Personal Finance News

Can home loan interest reduce your capital gains tax in the new tax regime? Explained
rajeev kumar
By Rajeev Kumar
4 min read | Updated on December 16, 2025, 13:26 IST


One view can be that since the taxpayer has not availed any deduction for such interest, allowing the same to be included in the cost of acquisition at the time of sale would not result in a double benefit. However, this can lead to tax troubles, says CA Dr Suresh Surana.

home loan interest deduction in new tax regime
Even the judicial authorities have taken different views on whether interest can be included as part of the cost of acquisition. | Image source: Shutterstock

If you are paying home loan interest for a self-occupied property and filing taxes under the new tax regime, you cannot claim a deduction for the interest paid to the bank. The interest deduction is available only for taxpayers under the old tax regime, as per Section 24B.


As you cannot claim a deduction in the new regime, you might be tempted to add the interest amount to your cost of acquisition to reduce your capital gains while selling this self-occupied property. But, is it allowed? Or, can you do it legally?

We consulted with CA Dr. Suresh Surana to find the correct answer to the above query. The following is an edited version of his response and suggestion for taxpayers:

WHAT'S THE RULE?

Interest payable on borrowed capital used for acquiring, constructing, renewing or reconstructing a house property is ordinarily allowable as a deduction under section 24(b) while computing income under the head “Income from house property.”

However, a taxpayer opting for the new tax regime under section 115BAC is not entitled to claim a deduction for home loan interest under section 24(b) in respect of a self-occupied property.

WHAT CAN BE ADDED TO THE COST OF ACQUISITION?

Historically, disputes arose where taxpayers sought to claim a double benefit by first claiming a deduction of such interest under section 24(b) during the holding period of the property and, thereafter, capitalising the same interest as part of the cost of acquisition or cost of improvement under section 48 while computing capital gains on sale.

In order to address this issue, the Finance Act, 2023 amended section 48 to expressly provide that the “cost of acquisition” or “cost of improvement” of a capital asset shall not include any interest which has been claimed as a deduction under section 24(b) or under Chapter VI-A of the IT Act.

As clarified in the Memorandum to the Finance Bill, 2023, the legislative intent behind this amendment was to prevent taxpayers from claiming a double deduction in respect of the same interest expenditure. However, the amended provision does not explicitly prohibit capitalisation of interest in cases where no deduction has been claimed under section 24(b) owing to opting for the concessional tax regime.

DIFFERING VIEWS

One view can be that since the taxpayer has not availed any deduction for such interest, allowing the same to be included in the cost of acquisition at the time of sale would not result in a double benefit and, therefore, would not violate the object of the amendment introduced by the Finance Act, 2023.

On the other hand, the tax authorities may contend that permitting capitalisation of home loan interest under section 48, when such deduction is otherwise not available under the new tax regime, may not align with the intent of the concessional regime and consequently, the revenue may argue that even indirect recognition of such interest through capital gains computation defeats the purpose of section 115BAC.

Even the judicial authorities have taken different views on whether interest can be included as part of the cost of acquisition.

The Delhi ITAT, in Rajesh Saluja v. DCIT (order dated 15 February 2024), held that the cost of acquisition should include only expenditure having a direct nexus with the purchase of the property and that interest on borrowed funds does not have such a direct nexus, and therefore cannot be included in the cost of acquisition.

In contrast, the Jodhpur ITAT in Gayatri Maheshwari v. ITO (order dated 5 May 2017) held that where a property is acquired out of borrowed funds, the interest paid on such borrowing is intrinsically connected with the acquisition and forms part of the cost of acquisition for capital gains purposes.

WHAT SHOULD TAXPAYERS DO?

In the context of the amendment to section 48, it would be prudent to adopt a conservative approach by not capitalising unclaimed housing loan interest as part of the cost of acquisition, as such a position may be susceptible to disallowance and could result in unintended tax and penalty exposure, as well as prolonged litigation with the tax authorities.

One view can be that since the taxpayer has not availed any deduction for such interest, allowing the same to be included in the cost of acquisition at the time of sale would not result in a double benefit. However, this can lead to tax troubles, says CA Dr Suresh Surana.

06/12/2025

Several banks — Union Bank, Bank of India, Bank of Maharashtra and Indian Overseas Bank — currently offer home loans at 7.35%. Borrowers at this rate will see their interest rate decline to 7.1%, which is also the deposit rate offered by some private banks. On a Rs 1 crore home loan for 15 years, a 0.25 percentage-point reduction in the rate reduces the EMI by roughly Rs 1,440 per month.

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Investor Akshat Shrivastava warns young professionals against the common 'rent equals EMI' logic for home buying. He argues this can lead to a lifelong financial burden, limiting flexibility as career and personal needs evolve. Shrivastava advises evaluating property value growth and affordability honestly, suggesting renting might be a better option if uncertainty exists.

Investor Akshat Shrivastava warns young professionals against the common 'rent equals EMI' logic for home buying. He argues this can lead to a lifelong financial burden, limiting flexibility as career and personal needs evolve. Shrivastava advises evaluating property value growth and affordability h...

05/12/2025

The Apex Court also observed that the exemption envisaged under Entry 13 is an activity-specific exemption and not person person-specific exemption.

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The people hide inside most of the time. It’s too hot or too cold or the air is too dirty. Sometimes, they fiddle with things

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The new rules also bring long-pending clarity on key areas such as security deposits, rent hikes, property inspections, repairs, and eviction procedures. For years, informal agreements and handwritten contracts led to conflicts between tenants and landlords, often leaving one party without legal protection. The government’s digital-first approach is designed to eliminate loopholes, ensure fair practices, and create a standardized rental system across India. As urban migration continues to rise and more households depend on rented accommodation, the New Rent Rules 2025 aim to build trust and accountability in the rental market.

New Rent Rules 2025: The Central Government has introduced the New Rent Rules 2025 to modernize India’s rental housing system and make it more transparent and

05/12/2025

As you have held the redeveloped flat for more than two years, it is treated as a long-term capital asset and the profit on its sale will be taxed as long-term capital gains (LTCGs). For calculating the cost of the redeveloped flat, the original cost incurred in 1976 is not relevant. What matters is the market value of the redeveloped flat on the date you took possession.

For calculating the cost of the redeveloped flat, the original cost is not relevant. What matters is the market value of the redeveloped flat on the date one took possession

04/12/2025

If you sell a house owned for more than two years and make a long-term capital gain, Section 54 offers relief.

The law nudges you to reinvest your capital gain in another residential property. The timelines are generous — you can buy a new home up to one year before the sale, or within two years after it. If you prefer to construct, you get three years.

Both Sections 54 and 54F are powerful tools for tax-efficient wealth planning but they work very differently and misunderstanding the conditions can lead to costly mistakes

02/12/2025

"On a coalesce of the judgments noted above, what would unmistakably emerge is, the order of the Adjudicating Officer or the order of the Appellate Tribunal, constituted under the Act, does not assume the mantle of a decree, within the contemplation of Section 2(2) of the CPC. Therefore, such an order/orders cannot traverse the path of ex*****on delineated under Order XXI of the CPC. The Courts have, in the afore-quoted judgments have illuminated that the proceedings before the RERA are not conceived in the mould of a civil suit, though the Act provides the procedure to be followed, as if it is a civil Court and therefore, cannot culminate in a decree in the classical sense. In that light, the applications so filed by the petitioner invoking Section 47 of the CPC to hold that the concerned Executing Court did not have jurisdiction was in tune with law."

The Karnataka High Court has recently ruled that an order passed by a Real Estate Regulatory Authority (RERA) does not amount to a civil court decree and cannot be executed through civil ex*****on...