Income Tax Benefit on Home Loan under Section 24 and Section 80C

For the purpose of simplicity and easy understanding, a comparison of Tax Benefit on Home Loan under Section 24 and Section 80C has been made here under:-

Particulars Section 24 Section 80C
Tax Deduction allowed for Interest Principal
Basis of Tax Deduction Accrual basis Paid basis
Quantum of Tax Deduction allowed Self Occupied Property:Rs. 2,00,000Non Self Occupied Property: No Limit Rs. 1,50,000
Purpose of Loan Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property. Purchase / Construction of a new House Property
Eligibility for claiming Tax deduction Purchase/ Construction should be completed within 3 years Nil
Restriction on Sale of Property Nil Tax Deduction claimed would be reversed if Property sold within 5 years

Section 80EE: Income Tax Benefit on Interest on Home Loan (First Time Buyers)

Arun Jaitley while announcing the Budget 2016 re-introduced Section 80EE which provides for additional Deduction of Rs. 50,000 for Interest on Home Loan. This incentive would be over and above the tax deduction of Rs. 2,00,000 under Section 24 and Rs. 1,50,000 under Section 80C.

This Deduction of Section 80EE would be applicable only in the following cases:-

  1. This deduction would be allowed only if the value of the property purchased is less than Rs. 50 Lakhs and the value of loan taken is less than Rs. 35 Lakhs.
  2. The loan should be sanctioned between 1st April 2016 and 31st March 2017.
  3. The benefit of this deduction would be available till the time the repayment of the loan continues.
  4. This Deduction would be available from Financial Year 2016-17 onwards.

The above 3 Sections relating to Tax Benefits on Home Loans have been summarised as under:-

Particulars

Quantum of Deduction (Rs.)

Self Occupied Property

Non-Self Occupied Property

Section 24

2,00,000

No Limit

Section 80C

1,50,000

1,50,000

Section 80EE

50,000

50,000

Please Note:-

  1. The above tax deductions are per person and not per Property. So in case you’ve purchased a property jointly and have taken a joint home loan, each person repaying the amount would be eligible to claim whole deduction separately.
  2. If you are living in a rented premise and are taking Tax Benefit of HRA Allowance, even then you can claim Tax benefit on home loan under Section 24, Section 80EE & Section 80C.
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