Tax Benefit for Interest on Home Loan under Income Tax: Section 24
Home loan is very usual form of financing ones dream home. Buying own home was never an easy task until home loan came in to light. Income Tax department too wants citizen of India to buy their dream home, this can be concluded from the tax benefits of Interest on Home Loan as given under Income Tax Act.
Income Tax Act provides deduction for housing loan interest under section 24b. We will discuss with some examples on how to avail benefit of Interest on home loan in Income Tax.
Interest on which loans are eligible for deduction under Section 24?
Interest on Loan will be allowed as deduction, if:
Loan is taken for the following purpose:
Maximum allowable deduction for Interest on borrowed capital:
Loan is for Purchase/Construction of Self Occupied Property:
When property is purchased or constructed for the purpose of self utilization, than Interest on such loan will be allowable as deduction up to Rs.2,00,000/- (Rs.3,00,000/- for senior citizen as per Budget 2019-20)
Loan is for Purchase/Construction of Not Self Occupied Property (Let Out/Deemed Let out):
There is no maximum limit for Interest on loan on purchase/construction of a property which is let out or deemed let out.