What is Section 24 of Income Tax Act?
Section 24 of the Income Tax Act is relate to the deduction of interest on home loans for taxpayers who own a house property.
The section provides for two types of deductions – a deduction of up to Rs. 2 lakh for interest paid on a self-occupied property and a deduction of actual interest paid (with no upper limit) for a rented out property.
Here are the key points to know about Section 24 of the Income Tax Act:
Eligibility:
Section 24 is applicable to all individual taxpayers who own a house property and have taken a home loan to finance it.
Deduction for self-occupied property:
For a self-occupied property, taxpayers can claim a deduction of up to Rs. 2 lakh per year for the interest paid on the home loan.
Deduction for rented out property:
For a rented out property, taxpayers can claim a deduction for the actual interest paid on the home loan.
With no upper limit on the deduction.
Availability of deduction:
The deduction under Section 24 is available only if the construction of the house property is complete within 5 years.
From the end of the financial year in which the loan was taken.
Co-ownership:
If the property is own jointly, each co-owner can claim a deduction for the interest paid on the home loan in proportion to their ownership share in the property.
In summary, Section 24 of the Income Tax Act provides for a deduction of interest paid on home loans for taxpayers who own a house property. The deduction is subject to certain conditions and limits.
And the availability of the deduction depends on whether the property is self-occupy or rented out.
FAQs:
- What is Section 24 of the Income Tax Act?
Section 24 provides tax deductions on the interest paid on home loans under the “Income from House Property” category. - What deductions are allowed under Section 24(b)?
You can claim up to ₹2 lakh as a deduction on home loan interest for a self-occupy property. - Is the ₹2 lakh deduction available for rented properties under Section 24?
Yes, the entire interest paid on a loan for a rent property can be claim as a deduction. - Can I claim a deduction for interest paid during the pre-construction period?
Yes, pre-construction interest can be claim in five equal installments starting from the year construction is complete. - Is there a deduction for principal repayment under Section 24?
No, Section 24 covers only the interest on the home loan. Principal repayment is covered under Section 80C. - Can I claim a deduction for multiple properties under Section 24?
Yes, deductions can be claimed for interest paid on loans for multiple properties, but the limit of ₹2 lakh applies to self-occupy properties. - What happens if my home is still under construction?
Interest paid during the construction phase can be claim in five installments after completion, but only if construction is completed within five years. - Is Section 24 available for a second home?
Yes, for a second home, the entire interest on the loan can be deduct, though rental income is taxed. - What is the maximum deduction for self-occupied property under Section 24(b)?
The maximum deduction is ₹2 lakh per financial year for a self-occupied property. - Can co-borrowers both claim a deduction under Section 24?
Yes, if both are co-owners and co-borrowers, they can each claim deductions up to ₹2 lakh on interest, proportionate to their share in the property.
To Visit: https://www.incometax.gov.in
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