2 Home Loans, 2 Deductions: Save ₹4L in Tax?
If you took a second loan to repay your home loan, you can claim tax deductions on interest for BOTH loans under the old tax regime — potentially saving lakhs. Here's how it works and who qualifies.
That ₹4L deduction could cover 2 years of your kid's school fees.
Your total tax deduction if you claim both loans smartly
Key Takeaways
Switch to old tax regime if you have a home loan — new regime does not allow Section 24(b) deductions at all.
Collect interest certificates from both lenders (original home loan + top-up or refinance loan) before filing your ITR for FY 2026-27.
Consult a CA to confirm your second loan qualifies — it must clearly state it was taken to repay the original home loan, not for personal use.
If you took a second loan to repay your home loan, you can claim tax deductions on interest for BOTH loans under the old tax regime — potentially saving lakhs. Here's how it works and who qualifies.
Here's what happened: Under the old tax regime, Section 24(b) allows up to ₹2 lakh deduction on home loan interest for self-occupied property each year.. A 1969 CBDT circular confirms that a loan taken to repay the original home loan qualifies for the same interest deduction — so both loans can be claimed.. This dual deduction benefit is expected to continue under the upcoming Income-tax Act, 2025, giving homeowners long-term planning certainty..
What you should do: Switch to old tax regime if you have a home loan — new regime does not allow Section 24(b) deductions at all.. Collect interest certificates from both lenders (original home loan + top-up or refinance loan) before filing your ITR for FY 2026-27.. Consult a CA to confirm your second loan qualifies — it must clearly state it was taken to repay the original home loan, not for personal use..
Pro tip: The ₹2 lakh cap under Section 24(b) applies per property, not per loan — so stacking two qualifying loans lets you claim interest from both within that ₹2L ceiling, maximising every rupee.
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- [1]“Taking a second loan for home loan repayment? Claim tax deduction on both under old tax regime for Tax Year 2026-2027” Wealth-Economic Times · 26 Jun 2026
This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.