Tax rebate house loan

Q: Is it true that the I-T Act says if a house to be used by the buyer is not handed over the by the builder "within three years from the end of the financial year in which capital was borrowed", the exemption on the interest amount will only be Rs 30,000 and not Rs 2 lakh, raised from Rs 1.5 lakh in the budget.

Pk Anand,

19th August 2014

Home Loan in Delhi

property tax

housing loan

income tax

tax benefits on home loan

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Hi Amit,
One thing that should always keep in mind that in case of self occupied property, this deduction is allowed only for one such self - occupied property. The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction of house property is eligible for deduction under section 24(b).

Gautam Das, Delhi-NCR

20th August 2014

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@Gautam,
You are absolutely right. For clear information i am giving you an example. Suppose your taxable income is: Rs. 570000
Principal repayment for the same year: Rs. 120000 and Interest payable for the year : Rs. 165000. Total Deductions allowed: Rs. 250000 (Rs. 150000 towards interest payable & Rs. 100000 for principal repayment of the loan)
Thus, your taxable income will reduce to Rs. 320000 ( Rs. 570000 - Rs. 250000 ).

Amit Raj, Delhi-NCR

20th August 2014

Hi,
As per Sec 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 150000 towards the total interest payable on the home loan towards purchase / construction of house property can be claimed while computing the income from house property. The deduction stands reduced to Rs. 30000 in case of loans taken prior to 1st March,1999. The interest payable for the pre-acquisition or pre - construction period would be deductible in five equal annual installments commencing from the year in which the house has been taken or constructed.

Amit Raj, Delhi-NCR

20th August 2014

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