Treatment of Interest against House Property in computation of Income [Section 24(b), 80EE, 80 EEA]
After calculating the gross annual value (GAV) which is fairly simple to compute, most of the confusion to calculate the income under house property lies in computing the amount of interest deductible from the GAV. Section 24(b) of the Income Tax Act, 1961 deals with deduction of interest from the GAV in order to arrive at the net asset value (NAV).
Interest deduction treatment is different depending upon whether the house property is self-occupied or it is let out. In the case of the former, deduction of up to Rs 2, 00,000/- can be availed, while property which is let out full amount of interest can be claimed as deduction. However with effect from FY 2017-18 if the deduction of interest results in a loss then only up to Rs 2, 00,000/- the loss can be set off from the other heads of income, balance left can be carried forward for upto 8 assessment years. In case where the loan is availed after 1st April 1999 and the house property is not purchased/constructed even after 5 years starting from the end of financial year in which the loan is availed then the amount of interest allowed will be restricted to Rs 30,000. (For e.g – Loan was availed on 31st July 2015 therefore to claim maximum deduction on the interest portion the house should be either purchased or constructed by 31st March 2021).
One important aspect while calculating the interest in the computation of house property income is the allowability of interest pertaining to the period prior to the purchase or construction of property. For all such cases the interest pertaining to prior period is aggregated and allowed in five equal instalments starting from the year in which the income from such property is computed for the first time. It is to be noted that the interest portion cannot be claimed as deduction and claim loss under income from house property during the years when the house is under construction and the loan has been availed for the same.
The interest limit is applicable per assesse. So if a home loan has been taken jointly then both the home loan bearer are entitled to claim the interest separately in their income tax returns provided both of them are legal owners of the property. Also only the interest on home loan is allowed as deduction u/s 24(b) and not the interest on interest.
Two new sections (80EE and 80EEA) have been introduced in the act, one by finance act 2016 and the other by way of finance act 2019 which deals with the deduction of interest over and above section 24(b). Unlike section 24(b) these two sections allow the deduction from the gross total income (GTI) under Chapter VI – A of the act and not from the income under house property. Therefore the assesse must have a positive GTI in order to claim deductions thereunder. Let us discuss some of the salient features pertaining to these:
Section 80EE – Dedution amounting to Rs 50,000 is allowed in addition to deduction under section 24(b).
- The loan should be sanctioned between 1st April 2016 – 31st March 2017.
- The value for the property should not exceed Rs 50 lacs and the sanctioned loan amount should not exceed Rs 35 lacs.
- The purchaser should be a first time home buyer also this is applicable only in case of residential house property.
- The benefit will be applicable till the time of repayment of loan continues.
Section 80EEA – Additional deduction amounting to Rs 1,50,000 is allowed in addition to deduction under section 24(b).
- The loan should be sanctioned between 1st April 2019 – 31st March 2020.
- The stamp duty value of the house should not exceed Rs 45 lacs.
- The carpet area of the house should not exceed 60 sqmtr in metro cities and 90 sqmtr in other cities.
- Only the individual is allowed to claim the deduction under this section provided he does not own any other house property.
Author Bio
Good Evening
I want one clarification..
I have availed Staff HL in my name for the purchase of our flat. We have availed another loan in our joint names.
Can I claim Rs 2 lac interest concession on my loan and can my wife claim Rs.2 lac interest concession on our joint loan.
Our office is telling that since the loan availed by me is not in the joint name, wife can claim only 50% interest ie Rs 1 lac in our Joint loan.
The property is in our Joint Names.
I got my house possession in the month of June 2023. I have taken a home loan running from Jan 2021 for which I will pay interest more than 2 lacs in the current financial year i.e., 2023-24. Also, I paid nearly 1.5 lacs of interest previous financial year. So, under section 24B I can get rebate of only 2 Lacs for the current year or for previous years also?
I have taken a Housing loan from the bank in December, 2020 and I m paying pre EMI interest on loan. Loan amount is 38 Lakh and construction area is 675 sft. Can I get the Tax exemption under 80 EEA as Rs. 2,00,000 and 1,50,000 during the assessment year of 2022-2023.
Hello,
I have taken home loan for plot & construction, 32 lakhs on 02/11/2022, Moratorium period is 18 months, Ist EMI :April 2024. Can I claim any deductions u/s 80EE/80EEA/24A in current year
I have booked a flat on 15th March. Now I wish to apply a home loan. Will u provide me an information that the section 24b for exemption of ITax may be applied as my loan will sanction during the FY 2022-23?
I am a salaried employee, I also have house loan for house purchased in year 2015. I also have LTCG/STCG for FY 2021-22 for MF/Shares.
I was filing form ITR 2.
My house loan interest under section 24b is getting added in total income as loss to be carried forward. Earlier ITR 1 was applicable to me and House loan interest was always deducted from total income.
Am I using correct ITR form?
why section 24 b deduction is not considered?
I have taken loan from LICHFL for the purpose of “Purchase of plot and construction” in 11/2020 for Rs. 35 lacs. I have purchased only plot and have no construction. I am paying interest in it regularly. Can I claim for rebate of interest under house property.
Hi Alok,
I do not have a house but I hold a residential plot in my name. Now if I buy an affordable home with a home loan up to 30-35lakhs that satisfies all conditions of 80EEa and Am I eligible to claim tax benefits both in 24a and 80eea?
YES.U CAN. ITS SAYING RESDENTIAL HOUSE BUT NOT THE PLOT
Loan was taken on 1st may 2018 and purchase a flat on nov 2018. Can i claim a Period prior to purchase as a deduction under Sec 24(b)
YES. IN 5 EQUAL INSTALMENTS
I am bank employee and would like to avail home loan under staff housing loan scheme where I will be charged 5.5% simple interest rate which will be payable later on. First 270 months I will have to pay principal amount and interest for the entire period is separately parked on accrued basis and will have to pay in next 90 months.
I would like to know whether I can avail deduction on accrued interest portion under section 24 or any other sections of income tax act.
YES SIR. UR CASE IS COVERED AND CLEARLY EXPLAINED IN CBDT’S CIRCULAR NO.363, DATED 24-6-1983.
Hi,
I have taken 2 home loans along with spouse and both are joint owners of the both properties: one is for self-occupied and one is for let-out. Hope we can claim full tax benefit on the interest component of the loan on let-out property along with interest component of the loan on self-occupied property based on the ratio of sharing we declare. Please clarify.
Thank you in advance,
I took home loan in 2018.can I get tax exemption under which cluase and how much?
I have taken a Housing loan from the bank in feb’19 and I m paying pre EMI interest on loan.
Value of house is 44 lakhs, Loan amount is 34 Lakh & Carpet area of Flat is also 47 Sq. mtr.
It is under construction . Can I get the Tax exemption. & under which clause & how much
Hi,
Need clarification on claiming deductions under 24(b) and 80EEA for a ‘rented-out’ property.
hypothetically,
1. If the interest on loan is – say 3,50,000/-
2. rental income – Rs 100,000/-
3. less standard deduction – Rs 70,000/-
4. 24(b) – -3,50,000/-
5. Income from HP – -2,80,000/-
In this case, I presume one cannot claim any benefits under 80EEA as the interest amount is adjusted in 24(b). But, -80,000/- loss has to be CF to later years.
Is the following possible?
1. If the interest on loan is – say 3,50,000/-
2. less deductions under 80EEA – Rs 1,50,000/-
3. Balance amount interest not adjusted – Rs 2,00,000/-
4. rental income – Rs 100,000/-
5. less standard deduction – Rs 70,000/-
6. deductions 24(b) – -2,00,000/-
5. Income from HP – -1,30,000/- (no CF).
My clarification stems from:
1. 80EEA – doesn’t mention exemption for self-occupied or rented out property.
2. 80EEA/ 24(b) – do not mention sequence of applying deductions.
Or am I missing something?
Thanks
If an assessee borrows money on account of home loan jointly with the spouse, but the house/apartment gets registered in spouse name, will he get the benefit of Section 24 ( B) and 80 C of I.T.Act ?