Interest On Housing Loan Under Section 24

Budget 2020 has proposed a new tax regime with lower tax slab rates along with removal of almost all deductions exemptions.

Interest on housing loan under section 24. In respect of self occupied house property interest deduction u s 24 b is restricted to rs 2 00 000. Income tax benefit on interest on home loan tax benefit on home loan for payment of interest is allowed as a deduction under section 24 of the income tax act. Home loan repayment is eligible for tax deductions under the income tax act 1961.

So the government has given plenty of tax benefits for house property under section 24 of the income tax act. Section 24 b of income tax act 1961 provides deduction in respect of the interest on home loans taken for the purpose of the purchase construction repair renewal or reconstruction of the property under the head income from house property interest can be classified as post construction period pre construction period interest. House prices have indeed shot through the roof and many end up taking home loans.

Home loan interest paid up to rs 2 lakh per year is tax deductible u s 24. Interest paid on housing loan is allowed as a deduction to the extent of rs 2 lakhs in respect of self occupied property. As the property is registered in joint names and they are co borrowers in the loan document they can both claim rs 2 lakhs as deduction under section 24 b on home loan interest payment and then claim rs 50 000 under section 80ee.

Buying a home is one of the most common long term investment goals for most indians. It is over and above the deduction of rs 2 00 000 available under section 24 b for interest paid in respect of loan borrowed for acquisition of a residential house property. Additional deductions are available u s 80ee and 80eea.

The couple would be paying rs 2 77 327 as interest and rs 73 978 as home loan principal payment in a year. A comparison between section 24 and 80c is given hereunder interest deduction with hra. Interest on home loan is allowed under section 24b while principal on home loan is allowed under section 80c.

The income tax benefits on interest on housing loan are covered under section 24 and section 80ee of the income tax act. Maximum deduction allowed under this section is rs 1 50 000. Section 80c allows deduction against principal repayment of up to rs 1 5 lakh every year.