For taxpayers who have an on-going home loan, the interest paid on such loans helps them lower tax liability in the existing income tax structure.
However, under the new income tax regime proposed in Budget 2020, the interest paid on housing loan is not available for deduction for self-occupied houses.
But for taxpayers who have rented out their house property, there is good news. Interest paid on housing loan taken for a rented out property can be claimed as deduction under section 24(b) even in the new proposed tax regime.
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The deduction for interest gets restricted to the rental income.
You cannot claim a deduction for principal repayments under the new regime. Thus, a comparison should be made between the new regime and the existing regime to arrive at the tax benefits. In your case, the existing regime is beneficial with a lower tax payable.