24b of Income Tax Act (Guide)

If you avail of a loan for purchasing, constructing a new home, or renovating an existing home, you can claim a deduction on the interest of the loan borrowed under section 24B of the Income Tax Act. The 24b deduction helps you save your taxable income.

If you are curious about this Section of the IT Act, keep reading!

Section 24B of the Income Tax Act allows you to claim a deduction on interest on any loan type. So, if you avail of a personal or a housing loan, you can claim a deduction on interest. However, you should utilize the funds sanctioned for purchasing or constructing a new home. You can also utilize it for repairing or renovating an existing house. The 24b deduction benefits you in the right way for saving your money.

Where is Section 24B?

Section 24 of the Income Tax Act comes under the title ‘Deductions from income from house property’. 24b deduction helps you deduct interest on the loan amount you borrowed.

While filing your ITR, you can deduct the interest on your home loan under section 24b. You could see this section under the title Deductions from house property.

Can I claim both 24B and 80EE?

Yes, if you meet the conditions under both sections, you can claim deductions under both Section 24B and 80EE.

If you buy your home for the first time, you can claim under Section 80EE of the Income Tax Act 1961 for the amount you pay as interest on the home loan.

Under Section 80EE, you can avail of an additional deduction of Rs 50,000. You are eligible for deduction under section 80EE if you buy the house for the first time and avail the loan by financial institutions between 1 April 2016 and 31 March 2017. This deduction continues till you repay the entire loan amount.

Under Section 24(b), you can claim a deduction of up to Rs 2 lakh if you occupy your property. And the entire interest is deductible for letting out property.

Thus, if you satisfy the conditions of both Sections, you can claim Section 80 EE over Section 24 B while filing your tax.

How do I claim section 24b in ITR?

If you buy your home/property under a home loan, you can claim a deduction under section 24b in the Income Tax Act. To claim the 24B deduction you need to satisfy the following criteria.

1. If you didn’t occupy your house, you can claim the exemption for the entire interest of your loan, without any upper limit.

2. If you occupy your house, you can claim tax exemption on interest payments up to Rs. 2 lakhs.

3. You cannot claim a deduction for any brokerage or commission for arranging the loan or tenant.

4. You have to buy or complete the construction of the house within three years of taking the loan to claim the maximum deduction on the loan interest amount. 

5. If the construction is incomplete within three years, you can claim only Rs. 30,000 instead of Rs. 2 lacks.

6. You should provide an interest certificate for the loan that you are taking.

Based on these factors, you can claim a deduction under Section 24B.

What is the maximum exemption for housing loan interest?

Housing Loan interest has got many tax deductions under various sections.

1. You can get a maximum exemption of up to Rs.2Lakh for the interest on your home loan under Section 24B
2. You can get an exemption of up to Rs.50000 if you are a first-time home buyer under Section 80EE. 
3. You can get an exemption of up to Rs.1.5Lakh under Section 80 EEA.

These are the various options to get deductions on your home loan interest amount.

FAQ :  24b of income tax act

1. Can a 24b deduction be claimed in the case of commercial property?

Section 24(b) comes into effect to reduce your interest rates on your property. This section is liable for your property and not residential or commercial property. 

Therefore, you can claim a deduction under Section 24b if you own residential or commercial property. The nature of the property doesn’t matter here. Commercial property also needs repair and renovation works and hence you can claim your interest benefits under Section 24b.

2. Can I show 2 home loans for tax exemption?

Your second home on a home loan is also liable for tax benefits. You can claim a deduction under Section 80C, 24B, 80EE on your first home loan.

You can benefit from tax deductions on your second home loan too. 

But deduction under Section 80C, which is the Principal amount deduction is not eligible for your second home loan. However, you can claim tax benefits for the interest component of your second home.

3. How can I claim my home loan interest in ITR?

You can claim your home loan interest under section 24B while filing ITR. 

Section 24B deals with the deduction of the interest component of your home loan of up to Rs.2 Lakhs.

4. What is the maximum limit of 24B?

The maximum deduction limit on the interest component of your home loan is ₹ 2,00,000. This is the same if you have left your property for rent or if you occupy your home. However, the deduction limit of ₹ 2,00,000 is reduced to ₹ 30,000 in case of the following situations:

1. If you get a loan before 1st April 1999 to buy or construct a new house.
2. If you get a loan on or after 1st April 1999 to repair or renovate an existing house.
3. If you borrowed a loan on or after 1st April 1999 and house construction didn’t get complete within 5 years from the year during which you took the loan.

Thus the maximum limit for 24B is Rs.2,00,000.

5. Can I claim both 24b and 80c?

Yes, you can claim both 24B and 80C for deductions on your home loan.

Section 80C deals with the deductions for the Principal amount for your home loan. You can claim a deduction up to Rs.1.5 Lakhs under section 80C.  

Section 24B deals with the deductions for the Interest amount for your home loan. You can claim a deduction of up to Rs.2 Lakhs under Section 24B.

Thus you are eligible to claim both 24B and 80C for your home loan.

Bottom line

The income tax department gives several deductions for your home loan. You can claim deductions under section 24B for the interest component of your home loan. The maximum limit for 24b deduction is up to Rs.2Lakhs if you occupy your house. Avail of these benefits under section 24b of income tax act and make your dream home come true.

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