Clear your Housing loan deduction

TDS 766 views 3 replies

Guest

Interest paid on Housing Loan: U/S 24(1) Interest paid/accrued on money borrowed for acquisition/construction is allowed as an deduction, the interest amount up to a maximum of Rs. 1,50,000 p.a. or the actual interest paid, whichever is less is allowed as deduction.
To claim deduction, construction/acquisition must be completed within 3 years from the end of financial year in which the loan was borrowewd.

Principal paid on Housing Loan: U/S 80C Aggregate of amount paid/incurred/invested towards repayment of housing loan principal towards self-occupied residential property can be claimed up to Rs. 1,00,000/-.
Aggregate of deduction U/S 80C, 80CCC and 80CCD should not exceed Rs. 1,00,000/-.

If you have still doubts, then plz feel free to revert for further clarification.

Replies (3)

sagar

CA Final

379 Points Joined February 2008

In addition to above what Deepak has rightly said. A person can get deduction of Interest on housing Loan u/s24 (ii). The said section does not have any limit of deduction of interest on Housing Loan. A person can get deduction in respect of whatever interest has been paid if the following condition satisfies.

1.. The House should be let out.

2. The money should be borrowed for acquisition or construction of House.

3. All other conditions as Deepak said will be in addition to above two conditins.

Guest

Example.,

John bought a house in Bangalore and staying that house. He got the loan amount of Rs.1000000 for that house. He is also working in the Bangalore city. His yearly Principal Repayment is Rs.100000 and Interest Repayment is Rs.40000.

He can save total of Rs.140000 (Rs.100000 + Rs.40000) since he is occupied that house and also staying in the same city.

Later he bought another house in the Chennai and took another Home Loan of Rs.1200000. He then started paying the EMI for that loan amount. He opted to rent out that house. His Principal Repayment is Rs.110000 and interest payable is Rs.50000 per annum.

He is eligible to show the Principle Repayment under the Tax Savings. Please note that the maximum amount he can show as the Principal Repayment is Rs.100000. In this case even if the rule permits him, he already repaying the principal of Rs.100000 for the Bangalore house. So, he already reaching the maximum limit.

But, in the case of rent payable, there is no limit on Tax Savings. It is because he rented out the house. This rule under section 24b. When you are applying for Home Loans and proposing that the house will be given for rent, you will be eligible for no limit on interest payable under Tax Savings.

Guest

Point to Consider while computing Income Tax on Home Loans

Income Tax exemption can be sought only once the construction is complete. You can seek Tax Benefits only from the financial year in which the construction is complete. There will be no deduction for the year in which the construction is still on as at the end of the year.