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Interest on housing loan and no. of properties on which housing loan exemption can be claimed.

Satish Chundi (Student) (38 Points)

04 October 2016

I have two questions. (a) The interest deduction available on housing loan taken on a self occupied property is Rs. 2,00,000. Is this Rs.2,00,000 allowed on a per annum basis or is it a cummulative interest that can be claimed on the loan taken on House Property. (b) The exemption and deduction allowed on housing loan can be claimed on how many house properties, i.e., if I take a second loan for a second house property, will the deductions/exemptions be available for the second property as well. Thanks in advance.

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4 Replies

CA Tanvi Sheth (Consultant) (232 Points)
Replied 04 October 2016

Hello,

The answer to your first question is that, the amount of Rs. 200000 is in a year. So in a year you can claim maximum interest upto Rs. 200000 for a self occupied property. The Deduction u/s 80EE is for a person and not property. So if you claim it for one property then cant claim for the second property.

Deduction of interest u/s 24 for the second property, you can claim complete interest amount as the second property will fall in category of deemed let out.

Thanks

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saurabh kumar (Tax Consultant) (348 Points)
Replied 04 October 2016

Housing loan taken for the purpose of self occupied house purchase/construction then the limit of Rs. 200000 as interest is allowed as deduction but in case of commercial properties there is no such limit so one can claim the whole amount of interest payable.(u/s 24(b)

Interest is allowed to be deducted on accural basis means even if the payment of interest has not been done the deduction will be allowed for the amount of interest related to P.Y.

Apart from that the payment of prinicipal amount is also allowed as deduction u/s 80(c) up to a limit of Rs. 150000 but its is allowed on payment basis and only for residential property only but it can be for more than one house property.

Satish Chundi (Student) (38 Points)
Replied 04 October 2016

Hi,

Thanks for the response. Just to clarify further, if I pay interest of Rs.2L in year 1 and again Rs. 2L in year 2, I can claim the deduction of Rs. 2 L in each year. Also, if I have two HP's, is the limit of Rs. 2L available for each HP (both being self occupied) or Rs. 2L overall.

saurabh kumar (Tax Consultant) (348 Points)
Replied 04 October 2016

Each year 2 lakhs limit is there for self occupied residential house.If you have two residential house then you have an option to choose one house as residential and another as deemed let out in that case the deduction for interest on loan taken for the another deemed let out house will have no limit.