Section 24 Income Tax Benefit of a Housing Loan

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. 

512 thoughts on “Section 24 Income Tax Benefit of a Housing Loan”

  1. Dear sir,
    I am taken a home loan for construcion of home on my own name in the month of May2011 and costruction started, mean time i have paid monthly interst without principle amount, and construction complited in the month of May 2012, and given complition certificate to the bank. So i want to known how should i get the tax benifit on interst paid.

    1. Deepak,

      Interest paid during pre-construction period can be claimed in five equal installments once you get the possession.So if you have paid interest of Rs 1 Lakh, you can claim Rs 20000 every year fr next five year when the construction gets completed.However do remember that this is within the limit of Rs 1.5 lakh under sec 24.

  2. Hello

    I am planning to buy a flat for 60 L in Bangalore and use it for 10 years and sell the same after 10 years. I am planning to buy this on full bank loan for 10 years. Please reply how do I compare cost of the flat after 10 years and how much loan (interest + principle amount) i will be paying in 10 years in today’s interest rates. These numbers I want to compare with expenses of house rent for 10 years in Bangalore. Please reply and guide me ASAP.

    Thanks
    Prabhu

  3. I AM CONSTRUCTING HOUSE ON MY WFES PROPERTY. FOR THAT I HAVE TAKEN LOAN FROM SBI AND I AM PAYING FULL EMI. SHE IS HOUSE WIFE. HER INCOME IS ZERO. SO SBI TAKEN ME AS A GUARANTEER . CAN I GET THE TAX BENEFIT.

  4. SIR
    I AM CONSTRUCTING HOUSE ON MY WIFES PLOT. I AM THE GUARANTER BECAUSE SHE IS HOUSE WIFE. IHAVE TO PAY FULL EMI. CAN I CLAIM FOR TAX BENEFIT. IF YES PLS TELL THE PROCEDURE OR IF NO HOW TO GET THE BENEFIT

  5. We have a house in the name of my father who was expired few years back. I wanted to buy with the consent of my brothers/sisters. Can I get Home Loan from bank? Can I get benefit in Income tax for Interest on Loan?.

  6. My father has taken loan for a flat and also flat is in my father and mother’s name, but the EMI is been paid by my brother. now as he is paying EMI he is not able get benefit in Tax.

    Can you please suggest what we could do, can we transfer the loan in his name, also if we can transfer the flat in his name but we do not wish to pay huge amount for flat registration.

    Thank you

  7. I am staying in house property owned in my name which i have let out to my company and getting self-lease every month. For this property balance loan amount was paid in Jan 2012. The same is free from any loan. Recently i have purchased another ready built flat with my spouse as joint owner. which shall be let out on rent. The approx yearly interest component paid on home loan is 4.5 lakh. Can you please confirm the following.
    1. Wherther 1.5lakh limit is still applicable for both of us or total yearly interest(4.5lakh) shall be divided b/w us in proportion of ownership.
    2. Income/loss from house property shall be calculated considering both properties.
    3. Please provide any ready-calculation/ article for calculating house income.

  8. Sir,
    pl clarify the followings:
    1. I have taken a house in co ownership with wife. First name of my wife and second my name. Ratio of share not deffined in deed.
    2.Taken house loan in my account although wife also coborrowers but i am main borrower as i have income.
    3. presently i was taking home loan benifit and paying EMI.
    4. Now I want that I should pay rent to wife for the same house and claim house rent deduction. Further, my wife will show rent in her return.
    5. Wife will pay amt of EMI to me and i will pay tp bank. then whether wife can claim deduction of interest.
    6. whether ownership of house can be shown in booksin the name of wife assuming that i home loan was taken for wife.

    Kindly suggest.
    Thanks in advance

  9. After calculation, I get to know that I have to pay tax. So in challan 280, which type of payment should I have to select? ” Self Assesment (300) or Tax Regular ASsessment(400)?

  10. Sir/Madam,

    I bought a new flat this year and possessed the flat on 1st July, 2012. The flat is regestered. I was planning to buy a 2nd flat. Shall I get tax exemptions on two flats ? What are the options ? If there are two home loans from two different banks are both tax free ?

  11. Hi sir,
    I am living in Pune whereas my wife and children are living in Bangalore. We have a house at Pune and recently bought a house at Bangalore. Both the houses are reigstered on our names as co-owners. The annual interest paid on Pune home loand is about 1.5 lacks and 6.5 lacks for Bangalore home loan.

    On Pune house, I am claiming IT benefit of interest paid on it as owned house.
    On Bangalore house, can we both claim income tax benefit on the interest paid? Our share of finance is 70: 30 between myself and my wife.
    If yes, can I show Bangalore house as deemed rented house (as I stay at Pune), whereas my wife (who is staying in the house) show it as owned house? In such case, can I be allowed to claim IT benefit on Bangalore house as second house, where as the same is owned house for my wife?

    please clarify

    thanks

    1. Nagarju,

      You can clam tax benefit on second house without any limits.One of your house will be self occupied and other will be deemed rented.However, as co-owners you can claim in the ratio of ownership only.Also, the same house cannot be shown as self occupied by one and deemed rent by other.

      1. Nagarju,

        A clerification for you.

        Co-borrowers, who are also co-owners, are eligible for tax rebate in the proportion of their share in the loan. So, a couple can be equal owners but if their share of the loan is in the ratio of 60:40 or 70:30, the tax benefits would be shared in that proportion.

  12. Sir
    I have following queries by seing your blog..
    1. If you going to fill your ITR by efiling mode than there is no need togive any documents than how income tax department come know that at what date you got possession with resistration ?
    2 I have two houses and both are rented while I am living in govt quarter so do not get HRA in salary. In this situation which ITR form need to be fill for ITR ?
    3. One house is with my name and other flat is resistered with name of myself and my spouse. In resistration share of parnership is not defined. Whole EMIs(of both houses) are paid by me. Now My wife has started to work as private teaching but she is earning only 50000 RS per years and she is also going to fill ITR from this assessment year. She will not claim any intrest benifit. Can I get intrest lost benifit for both houses ? Even my wife is co-applicant in one flat, can I claim 100% intrest loss for that property as I am paying 100 % EMI ? What is methord to convey to ITD as I am going to opt effiling process ? Pl suggest best way in which I get maximum benifits.
    4. As you know that we could not rented both houses through out 12 month because of 11 month aggement we are generally doing. So practically we got 10 to 11 month rents. How it can be reflected in ITR form ?
    5. I requasted to go through the HP(House property) schedule of ITR-2 and suggest how to fill as per my above situation.
    6. Can I get benifit intrest loss of 300000 by both ITR(my & my spouse) as per above situation ?

    P l reply urgentaly as last date for filling up ITR is 31 July,2012.
    Regards

  13. Dear Sir,
    I had purchased a house in Sept.2002 after taking loan from Bank. I am getting IT rebate on the loan amount (interest + principal). Around Rs.35,000/- on interest portion.

    In 2010, I have purchased a flat after taking loan of Rs.20.0 Lakh from LIC. I have paid Rs.1.65 lakh on interest portion this financial year.

    This financial year (2011-12), I have paid around Rs. 2.0 lakh on interest part Housing loan of LIC & Bank.

    Now, I am having one house and one flat. One house, I have given on rent basis and getting Rs.25,200/- rent per year.

    Sir, Please tell me how much rebate will I get on interest portion of loan Rs.1.5 lakh or more than Rs.1.5 lakh. I have paid more than 2.0 lakh income tax this financial year (2011-12).

    Please reply my queries Sir,

    Many Many thanks

    nk sahu

    1. NK Sahu,

      When you have two houses one is treated as self occupied and you can claim Rs 1.5 lakh interest on it.On second house you can claim housing loan tax exemption without any limit i.e. the entire interest.Hence, you will be able to claim Rs 2 lakh in your case for both the houses.

  14. Hi,

    I have taken a home loan against a 3 bhk flat around 4 years back.
    I bought this flat from builder in pre-launched. Now I have done the entire payment (except stamp duty & registration) of my flat and got the possession.

    When I am asking to get home loan rebate (on principle & interest), my employer is asking me to produce registered sale deed agreement.
    Since all the flats are not completed yet I am unable to register my flat.

    I wanted to know that is it really mandatory to have sale deed agreement in order to get income tax rebate on home loan. if yes do i have any alternate?
    FYi. I have all documents except registered sale deed agreement i.e bank loan sanction letter, sale agreement, possession letter, Bank certificate for re-payment.

    Many Thanks,
    Deepak

    1. Deepak,

      The property is not counted in your name till you register it.That’s the reason you are not able to get any tax rebate.

      Hence, you will have to first pay the stamp duty, register it and then claim for the tax rebate.

  15. I want tax rebate on house loan interest, (house self occupied) which ITR do I need to fill? ITR-1 or ITR-2? And which section Do I need to fill this in ? Is it income from house property?

  16. Hi Jitendra Ji,

    I want tax rebate on house loan interest, (house self occupied) which ITR do I need to fill? ITR-1 or ITR-2? And which section Do I need to fill this in ? Is it income from house property?

    Manohar Rawat

  17. Hi,

    Just like Karthik I did not show the housing loan details while declaring the income, and now I’ve I quit from the job. I received the Form 16 from my employer and it does not contain the details of housing loan principal repayment. The property is in the name of my father but the loan was granted considering my salary too. The provisional Interest certificate from the Bank includes both of us names. I’ve paid the 70 % of the EMI via cheque or cash payments (not interested in tho’). After I got the SB account number (Father’s) registered online, I’ve transferred it via my salary account. The Housing Loan account number is different from this though both are from the same bank.

    Can I show the amount transferred to my father’s name and file the return? If yes, can I submit the monthly statements showing the transferred amount.

    Thank you!!

    1. Sunil,

      Transferring the money to other account is not granted any tax exemption by the income tax department.Also the loan can be jointly, but if the property is not in your name you won’t be able to claim tax exemption.

  18. I bought plot and constructed house in it now I am getting 150000 tax benefit on interest component. If I construct 1 or 2 house above my home with separate house loan for renting purpose, Will I get tax exemption on the interest paid towards 2nd home loan?

    Regards,
    Shodhan Kini

    1. Shodhan,

      Since the ocnstruction will be on the same property you won’t get full exemption.However, you will be able to claim exemption upto Rs 30000 available for for house repairs /improvement.

  19. I have not shown Housing loan details to my organisation and hence the details are missing in my Form 16. However I’ve all details (especially statement from housing loan provider) now.

    I am still eligible to submit these details and re-calculate my taxes during IT filing?

    Your response would be of great help.

    Regards
    Karthik

  20. Dear Sir,

    We are residing in a house from past 21 years without any loans now we need to renovate while staying in house, and i am planning for home loan will i be able to avail tax benefit where 4 of our family members are owners to the property?

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