1.4 Deduction of interest on housing loan 24(b) from Income from House Property

1.4 Deduction of interest on housing loan (24(b)) from Income from House Property

Interest on borrowed capital (Self occupied property)

1. Loan borrowed before 01-04-1999 either for New construction, repaired, renewed or re-construction Interest is allowed subject to Maximum to 30,000 INR (Aggregate of either one or two self-occupied property)

2. Loan borrowed after 01-04-1999 for acquired or construction of property. If construction completed within 5 years from the end of financial year in which capital was borrowed Interest is allowed subject to Maximum of 2,00,000 INR (Aggregate of either one or two self-occupied property)

3. 1. Loan borrowed for repaired, renewed or reconstruction of property and 2. Loan borrowed for Construction of property but construction not completed within 5 Years - Interest is allowed subject to Maximum of 30,000 INR (Aggregate of either one or two self-occupied property)

Note: In any case Interest on borrowed capital for home loan is not allowed more than 2,00,000 INR either loan is taken for construction or repair of one self-occupied property or two self-occupied property.

Interest on borrowed capital (Let our Property/deemed let out property)

Interest on borrowed capital on home loan is fully allowed without any above ceiling limit.

Other important point:

1. Unpaid purchase price can also be consider as loan if balance amount is paid in instalment along with interest due thereon to the seller.

2. Interest on unpaid interest is not deductible.

3. Interest is allowed on accrual basis. Interest accrue but not paid can also be claim as deduction.

Note: above explanation is for basic understanding and can not be considered as legal document. Please refer the Income Tax Act 1961 section 24(b) for more detail.