Section 24 of the Income Tax Act deals with the interest an individual pays on a home or property loan.
The name of this particular section is 'Domestic Property Income'. The discounts available are the loan
interest and the standard deduction.
There are several sections in the
income tax law for obtaining the tax deduction on specific investments and
expenses. One of the investments under constant legal pressure is the purchase
of the residential property. The government recognizes that housing is the most
important requirement as well as ownership, and many investments in your first
home are tax-deductible.
An important section related to a home loan in Section 24, allows you to apply for an exemption on the interest you pay on a home loan. Another section, Section 80C, allows you to apply for capital redemption tax benefits.
Section 24 is titled "Home
Ownership Income Exemption". Income from home applies in the following
cases:
If you are sending out, the rent
received will be considered part of your income;
If you have more than 1 home, the
annual net worth of the home, not including the home you live in, will count as
your income.
If you only have 1 house and you
live in it, the income from home ownership will be considered nil. Any rental
income and the annual value of additional housing are subject to tax deduction
under section 24.
Section 24. exemption Below
Here are two types of Income-tax
deductions U/s 24 of the Income Tax Act:
Standard exemption: this is an
exemption allowed for each taxpayer, where the amount equal to 30% of the net
annual value is not covered by the tax ceiling. This does not apply if you are
only occupying your home.
Interest on the loan: If you take
out a mortgage to buy, build, or renovate a home, any interest you pay on the
actual loan amount will be deductible from your tax payments. This category has
the following 2 sub-categories, out of 2 in total.
If you take out a loan for a
self-occupied property, you will have to pay Rs. Discounts can be requested
up to. 2 lakh.
If you take out a loan to buy or
build a property (not a renovation), you can still request interest before
actually buying or finishing its construction. You can request the deduction on
interest paid before the completion of the construction or purchase, in 5 equal
instalments from the year in which you bought or completed the house.
If the home is borrowed for
renovations or renovations, you will not be able to apply for the tax deduction
until the renovation is complete.
To get this exemption, you need to
calculate the amount of interest you owe to the bank or financial institution
you borrowed from, rather than the actual payment. It doesn't matter if you
actually pay the lender the amount: you can get a discount on the entire amount
of annual interest.
Exceptions under Section 24.
If the house is not in your
possession, you can request the deduction of the entire amount of interest due
without any maximum limit.
If you do not occupy the house
because you live in another city for work or business reasons and you live in
any other property or rental property in the city where you are employed, you
can get the tax deduction only on the payment of interest. Rs. Can claim. , 2 lakh.
There is no exception to any
brokerage or commission for loan or tenant arrangements.
To request the maximum deduction on
the loan interest amount, the home must be purchased or completed within 3
years of the loan being granted. If the construction or purchase is not
completed within 3 years, you will only have to pay Rs. Can claim. 30,000
instead of 2 lakhs.
The loan you are taking out must have a certificate of interest.
