Home entity loan

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Querist : Anonymous

Querist : Anonymous (Querist)

15 August 2014 if anyone already have interest for construction of house, is he can also avail home entity loan in LIC (Deduction u/s 24b)

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Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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28 July 2024 Yes, an individual can claim a deduction under Section 24(b) of the Income Tax Act for interest on a home loan even if they already have an interest for construction of a house, subject to certain conditions. Here’s a detailed explanation:

### **1. Deductions Under Section 24(b)**

**Section 24(b) of the Income Tax Act:**
- Provides a deduction of up to ₹2 lakh per annum on the interest paid on a home loan for a self-occupied property.
- For a property that is not self-occupied (e.g., let-out property), the entire interest paid on the home loan can be claimed as a deduction with no upper limit.

### **2. Claiming Deduction on Home Loan:**

**When You Have Existing Home Loan for Construction:**
- If you have a home loan for construction, you are eligible to claim a deduction on the interest paid under Section 24(b) of the Income Tax Act.
- This deduction can be claimed for both interest on home loans taken for the construction of the house as well as for the purchase of a ready-to-move-in property.

**Additional Home Loans:**
- If you avail a new home loan from LIC or any other lender after taking a loan for construction, you can claim the interest deduction for this new loan as well.
- You will need to ensure that the new loan is used for purchasing or constructing a new property or for improving an existing property.

### **3. Conditions and Limits:**

**Self-Occupied Property:**
- For self-occupied property, the maximum deduction allowed is ₹2 lakh per annum on the interest paid.

**Let-Out Property:**
- For a let-out property, there is no upper limit on the deduction for interest paid, though the loss from house property is capped at ₹2 lakh which can be set off against other income.

**Documentation:**
- Ensure proper documentation and receipts for all interest payments. The lender will provide you with an interest certificate, which you should retain for filing your income tax return.

### **4. Key Considerations:**

1. **Separate Deductions for Different Loans:** You can claim interest deductions for multiple home loans, but the total deduction per property is subject to the limits mentioned.
2. **Loan Utilization:** The new home loan must be used for the purpose of purchasing or constructing a property to claim deductions under Section 24(b).
3. **Proof of Payment:** Maintain records of all interest payments and loan statements as proof for claiming deductions.

### **Summary:**

You can claim a deduction for interest on multiple home loans, including the new loan from LIC, provided the loans are used for eligible purposes (purchase, construction, or improvement of property). The key is to ensure that all interest payments are well-documented and comply with the provisions of the Income Tax Act.

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