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Interest on house property

Dileep (Others) (30 Points)

04 March 2015

Hi,

I work as Software Engineer. I have one basic and very confusing question.

Would like to know the logic behind this consideration.

1. For a self occupied house - meaning the house where tax payer lives will be exempted only 2Lakhs ruppes on Interest Component of Housing Loan.

2. For a let out house - meaning the house where the tax payer living some where else and his property which is on let out will NOT HAVE ANY LIMIT on Interest Component of Housing Loan.

Dont this should be other way like who ever stays in the house for which housing loan was being paid can avail unlimited benefit on housing loan interest component?

Thanks, Dileep.

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4 Replies

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 04 March 2015

Hello,

Tax Benefit on Home Loan for payment of Interest is allowed as a deduction under Section 24 of the Income Tax Act. As per Section 24, the Income from House Property shall be reduced by the amount of Interest paid on Home Loan where the loan has been taken for the purpose of Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property.

The maximum tax deduction allowed under Section 24 of a self-occupied property is subject to a maximum limit of Rs. 2 Lakhs (increased in Budget 2014 from 1.5 Lakhs to Rs. 2 Lakhs).

In case the property for which the Home Loan has been taken is not self-occupied, no maximum limit has been prescribed in this case and the taxpayer can take tax deduction of the whole interest amount under Section 24.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 04 March 2015

It is a deduction.

Dileep (Others) (30 Points)
Replied 04 March 2015

Originally posted by : Vishal Goel
	It is a deduction.

I understand the deduction process. But my question is

Mostly (not all) who give a property to LET OUT means, he already owns another property where they actually stay. This means why not the SELF OCCUPIED should get NO LIMIT on interest component instead of LET OUT property.