Section 24 Income Tax Benefit of a Housing Loan

by Manshu on November 30, 2011

in Tax

A house loan repayment has two components – principal and interest – and both of these components are treated differently for tax benefit calculation purposes.

The principal amount is covered under Section 80C and has a Rs. 1 lakh limit. In order to claim the tax benefit under 80C the house should already be constructed, and should be a residential property.

Tax Benefit of Home Loan Repayment

Tax Benefit of Home Loan Repayment

Section 24: Tax Benefit on the Interest On Home Loan

The interest on the home loan is treated differently, and Section 24 deals with the tax aspect of the interest on house loan repayment.

The maximum limit under this section is Rs. 1,50,000 and you don’t have to actually live in the house to claim this benefit.

The interest payment is deducted from your taxable income and thus reduces your tax liability. There is no limit on the number of houses you can claim this as well as the location of the houses. The only limit is Rs. 1,50,000 on the whole amount.

There are special conditions like when you get the loan disbursed before the construction of the house and pre – EMI interest and Raag has covered these aspects in a lot of detail in his post about tax benefits of a home loan which you can read if you were interested in those details.

Correction: An earlier version of the article stated that the 80C deduction is only available if you are living in the house. CA Karan Batra notified me that you don’t have to live in the house to claim deduction. Apologies for the mistake. 

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{ 483 comments… read them below or add one }

Gurjeet December 8, 2014 at 7:01 pm

Here is my situation.

The flat I own was previously owned by my Blood Brother. He got the flat transferred to me as gift, but the loan still remains under his name. We had a mutual agreement that I will pay the EMI, hence on a monthly basis I pay my brother, and eventually the EMI gets debited from my brothers account.

My brother is not claiming this for tax benefit as the money at the end is paid by me. I want to know if I can claim this for Tax, since I am paying the loan indirectly. Please advise.

Reply

VIJAY February 13, 2015 at 10:38 pm

Your brother can relinquish part of the property by Registering the deed. You can legally claim exemptions.

Vijay

Reply

Harshal December 19, 2014 at 10:09 pm

Hii,
sir, I have taken housing loan as on 15th June 2013 and my property was in underconstruction till September 13 (possession date- 10/09/13) so what is the taxability for preconstruction interest from june to sept for f.y 13-14 ?

Reply

subhash January 1, 2015 at 12:41 pm

purchased 2 (small) flats @12,50,000/-each in june 2012 with home loan of 10,00,000/- each. claimed 80C(principal, stamp duty) and section 24(interest) for both as self occupied and deem-let-out during last 2 years.
Again purchased a (large) flat @35,00,000/- in july 2014 with home loan of 26,00,000/-; but before that i have fully repaid and closed earlier 2 home loans (then only got new loan).
Then, sold 1 (small) flat @15,50,000/- in Dec.2014; and panning to sale another (small) flat.
(To save extra capital gain tax, wish to sale second small flat only after March 2015; is it OK?).
Pl suggest how to calculate capital gain(STCG)??? Also, tax calculation regarding reversal of 80C and/or 24 (principal, stamp duty and interest).

Reply

Melvin Joseph January 8, 2015 at 5:47 pm

Nice and informative article. Keep up the good work in financial literacy.
Now with 2 lakhs deduction under section 24, it will be attractive for many home buyers. Hope of a reduction interest rate from this year also can revive the real estate sector.

Reply

RAM JANAM ROY January 17, 2015 at 12:08 pm

Sir,
I had acquired a fully finished house from the state housing authority for which i took a loan (2009) from my office (Central Gov) and have been claiming the interest on accrual basis. Now, i am planning to construct the second floor of the house for renting for which i have to take second loan from bank.
can i get rebate of interest amounting Rs. 200000/ in aggregate on both loans ?
further i have to state that i did not claim the deduction of principal on the first loan and i am presently residing in the Govt accommodation and my house is unoccupied.
please advise.

Reply

Ashokraj Kaushik February 4, 2015 at 7:29 pm

I was allotted residential plot secret 3 greater NOIDA in the year2009 and payment made by taking housing loan from llichf and paying EMIs regularly. The possession of the plot has not been handed over due to dispute farmers with Gnoida authority. Now I want to claim tax rebate on salary account Delhi police but ddo has refused to give benefit. Is I entitled. Pl intimate.

Reply

Tamil March 14, 2015 at 7:44 am

Hi,
I Have purchased home and gifted that home to my brother.. But remaining EMI amount my brother given to me on monthly basis. EMI is still my bank account only. I would like to purchase another House. Whether I am eligible for taking a home loan again?

Reply

Sachin March 30, 2015 at 11:04 pm

One of my clients is selling his flat; he has an allotment letter of this flat from the developer dated in Sep 2011, the house was under construction and so his sale deed was executed in July 2012. Kindly help us that which date will be applicable for considering long term capital gains, will it be from the date of allotment letter or from the date of sale deed?

Reply

Manish Kumar April 1, 2015 at 12:40 pm

I have taken the home loan from LIC housing finance where the land is in name my father. I used to honor the EMI to bank from salary account where my father is not claiming the any benefit from Section 24B Income Tax Benefit of a Housing Loan. In circumstance I can avail this tax benefit under Section 24B Income Tax Benefit of a Housing Loan.
Looking forward for your reply as earliest possible.
Regards
Manish Singh
08588813792

Reply

MANISH SHAH May 15, 2015 at 3:57 pm

Dear Sir,
with reference to housing loan interest & principal amount .
i have taken loan from bank in which first name of my wife & second name is my name. and all HOU.loan EMI deduction from my salary can i claim both principal & interest against my income.please answer.If any specific propotionate certificate is required or not.

Reply

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