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.
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.Â
salary gross 750000
home loan principal is benifical for deduction from salary calculation
interest paid on housing loan is rs 125000 can it benifical for as 100000lac investment
an other mediclaim ins is benifical for this
Hi Manshu:
Let me try and summarize better.
• In 2006 I bought a house which I declared Self Occupied Property. I took a housing loan to buy it.
• From 2006 to 2013 I claimed tax benefits under section 80C (for Principal of Rs 1 lac) and under section 24 (interest loss upto a maximum of Rs 1.5Lacs per annum).
• In March 2013 I paid down the housing loan and cleared it.
• I am planning to buy one more house in the same city and claim that as a self-occupied property. I aim to get a housing loan to buy it.
My questions are the following.
• Can I claim the same benefits (80C and 24) for the housing loan I am taking to buy this second self-occupied house – based on your inputs above you think I can?
• Will I have to now show nominal income from the first house I had bought in 2006 – even though I have not leased it out?
• Can the IT department force me to either claim the benefits for the house I am planning to buy as a second home by saying it cannot be Self-Occupied Property as I already have one Self Occupied Property in the same city OR Can they force me to declare the first house as a rented property and pay tax against nominal rent income??
Thanks
V
Yes, as far as I know you can claim both benefits without having to do anything additional. I Googled this up and found another link which seems to confirm this. You can read it here and see if you can post any questions there and got more definite answers.
http://www.caclubindia.com/experts/80c-deduction-housing-loan-repayment-27236.asp#.UVTwThdQG8A
Thanks Manshu!
So what you are saying that even if I haven’t sold off the first house I bought and am not claiming rent income on it, i can still treat the second home I buy in the same way as the first home as long as I am only claiming interest deductions against it.
Vinita
This comment is not clear to me, I’m not sure I understand what you are saying. What I was trying to say is that based on my understanding I feel that the rule for the second home only works if you have two home loans simultaneously.
Hi all:
I bought a house in 2006 and took a loan to purchase the property. I have been claiming deductions under section 24 and section 80c for the past 6 years. Now i have paid down the loan completely this year. I am planning to buy a new house in the same city that i purchased the first house in in the next fiscal year. The first house remains unoccupied and I am planning to claim the principal and interest (capped at 150,000) for the second house – though it will still be only one home as far as the income tax is concerned.
I wanted to understand if this is technically correct or do i have to show the second home i purchase under the second home and only claim interest net of nominal rent as deductions.
Thank you,
Vinita
As far as I understand the second house works only if you are paying off loan for two houses at the same time.
I HAVE PURCHASED FLAT IN NAME OF MY WIFE AND TAKEN HOUSING LOAN IN MY NAME IN THE YEAR 2008.
I AM CLAIMING INTEREST DEDUCTION FROM MY INCOME AND ALSO TAKING BENIFIT OF PRINCIPAL AMOUNT U/S 80
SHOULD BENIFIT TAKEN BY ME IS CORRECT OR NOT
Dear Sir,
I am availing a joint home loan with my wife of Rs. 20 lacs each (Total 40 lacs) for our First Home. As per the Union budget the tax exemption on interest component for first time buyers has been increased to 2.5 lacs for loans below 25 lacs.
So, in our case as the individual loan for each is 20 lacs (less than 25 lacs) for our first home. Will both of us be eligible for tax benefit on interest of 2.5 lacs p.a. ??
is loan from LIC housing for purchase of plot eligible for section 80C & 24
please advise
Sudhir Bhatnagar
Hello Sir,
First Home:
I have purchased my first home(Year 2010) at noida, its under construction (Possession 2016), I am paying EMI of 17500.
Second Home:
Last month (Feb-2013), I purchased another flat in noida itself, This is also under construction (Possession 2014), Paying EMI 21000.
I am living in rented flat in noida.
Here my question is :
1. Am i eligible for HRA + Home loan Interest & Principle for any home (If yes then for which one ?).
2. Should i claim tax rebate for both home loan (First home & second home)?
Thanks
Pankaj Gupta
Sir
I’ve taken a joint home loan along with my mother for purchasing a constructed house. However, the house is registered in my mother’s name only. I am working at another place in a different state. I am repaying the entire EMI from my salary as my mother is a non-earning member of the family.
Income tax practitioners however said that I cannot claim deductions under sec 24 and 80c as the house in not registered in my name.
My contention is that the either sections, sec2 4 and sec 80C, DOES NOT require that the house so purchased or constructed should be in the name of the assessee. In other words, it doesn’t require that the assessee should be the owner of the house. It just requires that the asseessee should have purchased or constructed the house from borrowed capital.
( A similar case can be cited in sec 54F where the sec doesn’t mention that the investment of the long term capital gain should be in done in the name of the assessee. And Delhi High Court has decided in favour of the assessee where the assessee has invested the long capital gain for purchasing the house in wife’s name only)
( copy of sec 24 follows:
24. Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely:—
(a) a sum equal to thirty per cent of the annual value;
(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:
[Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.)
My query is:
Whether I can claim the relief under sec 24 and sec 80C?
If not, please mention the relevant rule or act of income tax.
Regards.
I’m sorry I’m not sure what will happen in this case.
I have booked a builder’s flat in April 2010 till date, the construction has NOT been completed / possession not handed over. I had taken housing loan in april 2010. I am paying EMI’s regularly. I am a Govt employee. My Queries are:
1) What exemption can I claim and under which all section {Sec 80 / Sec 24} AND What amount.
2) Is there a rule that Construction MUST be competed in THREE Years, to claim benefits.
AWAITING TO HEAR FROM YOUR END.
Regds,
Amit
We booked a vacant plot on my name and my wife’s name(50:5o share)during the year 2009 forwhich I received SBI home loan Rs 12,00,000.00 on 8.10.2009. We applied for a plan permit and got the approval on 26.12.2011. We started our house construction in the same purchased plot and in the mid of construction, we applied for a home loan for a value of Rs 20,00,000.00.The first installment of home loan of Rs 15,00,000.00 was issued on 10.08.2013 and final installment of loan was issued during the month of April, 2014. The house construction was completed on 3.8.2014. We remitted the following details Interest to SBI.
A) For a loan of Rs 12,00,000.00
i) Pre-construction period interest on the loan amount of Rs
12,00,000 issued on 8.10.2009 are as follows:
8.10.2009 to 31.3.2010 = Rs 45032
01.04.2010 to 31.3.2011 = Rs 91157
01.04.2011 to 31.3.2012 = Rs 90475
01.04.2013 to 31.3.2014 = Rs 96164
—————
Total Amt of Interest = Rs 4,08,732
—————-
ii) Post construction period on the loan amount of Rs
12,00,000 issued on 8.10.2009:-
Projected interest (01.4.2014 to 31.3.2015)
= Rs 89,734
B) For a loan of Rs 20,00,000.00
a)Pre-construction period interest on the loan of Rs 20,00,000.00
issued on 10.8.2013 is as follows:
(10.8.2013 to 31.3.2014) = Rs 1,10,564
b)Post construction period on the loan of Rs 20,00,000.00
issued on 10.8.2013
Projected interest (01.4.2014 to 31.3.2015) =Rs 1,94,900.00
Since the house was not completed within three three years from the date of issue of first loan, I am told that I will be eligible for Rs 30,000.00 only instead of Rs ((50%*4,08,732)/5) +(50%*89,734.00) and the pre-construction and post -construction interest issued on 10.8.2013 for a value of Rs 20,00,000.00 loan can be fully claimed. As the house is self occupied and under such scenario,
My Queries are:
1) What exemption can I claim and under which all section {Sec 80 / Sec 24} and what amount?
2) As the final disbursement of loan falls during the month of April 2014,Is there a rule that construction MUST be competed in THREE Years, to claim tax benefits from the date of first installment of loan? i.e 8.10.2009
3) In order to avail full tax exemption of Rs 2,00,000.00, whether the constructed house is to be self occupied or to be let out.?
3) The construction is started after the first loan and the second home loan is also availed, how the completion date of construction is calculated?i.e from the date of first loan or from the date of 2nd loan?
Kindly advice
I took loan to buy Plot and construction on the plot. I returned the loan within 2 years and took income tax benefit for 2 year on interest i paid. Now i am buying a flat, i would like to know on how much interest i can get income tax benefit?
Dear Sir,
I want to take a home loan to construct a house in a plot which is my father’s name. My father is dependent on me. I am staying ouside in a rented house. Shall I get tax benifit on the Principal of the loan I shall Pay. Shall I get any tax benifit on the interest I shall pay as there is a statement that Tax benifit on interest will be given after possessing the property and I am not going to possess the property.Is it possible to constuct the house in my name(but land is in my father’s mane) and get the tax benifit on interest. In the same time shall I get tax benifit on HRA.
Thanking You.
Dear Ananta, since you won’t be living in the house, the principal is not going to be tax deductible for you.
The interest payment will be available for you to claim tax deduction if the house is in your name. The condition to live in the house is not present to claim interest deduction.
I am claiming both 80 C and section 24 benefit for my housing loan.. just want to ask can i claim further deduction on account some furniture purchased and renovation of the house? if yes, under which section ?
No, you can’t claim deductions for furniture or renovation.
Dear sir,
I have two house in one city.
First home loan over,which i have given on rent.
Second home loan started, where i am staying right now.
Can i claim upto 1.5 lakh or unlited(total) intrest of running loan ?
i have taken a loan for renewal of my house is the interest paid is eligible for rebate and is there a limit
Renewal of your house? Renovation?
Dear Sir,
I have a home loan of Rs- 8,00,000.00 (Eight lakes), I am a govt Employee of Assam state, and I am drawing house rent (HRA) with my salary. I live in the same house for which I have borrowed loan and paying EMI for it.
My question , am I eligible for benefits IT of under both the section 80 C & Section 24 ?
I have purchased a flat in the year 2002 and got i.t. benefits (both principal & interest) and the flat is now lying vacant as my working place is too far from that flat and I have repaid full housing loan. Now I want to purchase another flat near my working place from banks/financial institution. Now I want to know that can I get full i.t. benefits (both principal and interest) as I got like before ?
In case of second house, no deduction is available for principal payment, but it is available for interest repayment.
Sir,
I am a U.P. state govt servant and residing in a government quarter. I’ve taken a home loan to purchased a semi built house, as the house is being constructed by me I am residing in govt quarter. In such condition can I claim the deductions u/s 24 for EMI interest and u/s 80 for EMI principal.
I Have two flats in Thane . First flat purchased in 2005 . 2nd Flat purchased in 2012 . I am stayng in 2nd house for which interest component is Rs 400000 and interest componont for First flat is R2 45000/- only and it is rented (for a monthly rent of Rs 1000/) . Is it possible for me to show 2nd house as rented and first flat as self occupied so that I can claim enire Rs 400000/- as interest. Pl Guide me
No, it is not.
sir,i am govt servant allotted govt quarters rent paid by me, i have own house-housing loan now the quistion is i rebate the housing loan in IT