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:-
- 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.
- The loan should be sanctioned between 1st April 2016 and 31st March 2017.
- The benefit of this deduction would be available till the time the repayment of the loan continues.
- 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:-
- 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.
- 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.