Tax Deduction on Home Loan Interest under Section 24
Know about Tax benefit under section 24 on Home loan
Taking a home loan comes with various tax benefits in India. There are certain benefits that can help you reduce your taxable income in number of ways.
First, you can claim upto Rs. 2 lakhs (1.5 lakhs if filing returns for last financial year) under Section 24 of income tax act for the repayment of the interest on home loan.
Second, you can claim upto Rs. 1.5 lakhs under Section 80C of the Income Tax Act.
One must the know conditions to claim the Rs.2 lakhs rebate:
Condition 1: The home loan must be for construction or purchase of a new property, deduction on interest cannot be claimed when the house is under construction.
Condition 2: The loan must be taken on or after 1 April 1999
Condition 3: The construction of that property must be completed within 3 years from the end of the financial year in which the home loan was taken. If the construction is not completed within 3 years the deduction on home loan interest shall be limited to only 30,000 instead of Rs. 2 lakh.
Also remember, the tax deduction of Interest on Home Loan is deductible on an accrual basis. Hence, it can be claimed on yearly basis even if no payments has been made during the year.
There are two types of deductions allowed are available under Section 24
1) Standard deduction: A tax deduction of 30% of net annual value of the property
2) Interest paid for your home loan
How To Calculate your Income Or Loss On House Property?
|A.||Gross Annual Value (rental income)||xxx|
|B||Less: Taxes (Municipal and local authority taxes)||-xxx|
|Net house property value||xxx|
|C||Deductions under Section 24:|
|1. Standard deduction @ 30% of net annual value||-xxx|
|2. Interest paid for your home loan||-xxx|
|Income/loss from house property (property net value – deductions u/s 24)||xxx|