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Home loan interest deduction

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Surendra Kumar

31 Points Posted on 26 August 2020

If home is purchased from fund borrowed in May 2016, what portion of interest is deducted u/s 24(b) and what u/s 80EE. What is difference between the two??

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Quick Summary

This discussion clarifies deductions for home loan interest paid on a property purchased in May 2016. It explains that under Section 24(b), you can deduct up to Rs 2 lakh on interest for self-occupied or vacant properties, or the full interest if rented out. Additionally, Section 80EE offers an extra deduction of up to Rs 50,000, provided specific conditions like loan amount, property value, and ownership status are met, and the loan was sanctioned between April 2016 and March 2017.

Sagar Patel

Tax and Business Consultant

11616 Points Posted on 26 August 2020

Under Section 24 Owners can claim a deduction of up to Rs 2 lakh on their home loan interest, if the owner or his family resides in the house property (i.e Self occupied). The same treatment applies when the house is vacant.
If you have rented out the property, the entire home loan interest is allowed as a deduction u/s 24.

Deduction u/s 80EE : This deduction (up to Rs. 50,000) is over and above the Rs 2 lakhs limit under section 24 of the income tax act if following conditions satisfied :

Value of the house should be Rs 50 lakhs or less

Loan taken for the house must be Rs 35 lakhs or less

The loan must be sanctioned by a Financial Institution or a Housing Finance Company

The loan must be sanctioned between 01.04.2016 to 31.03.2017

As on the date of the sanction of loan, no other house property must be owned by you.