Section 24 — Deduction on Home Loan Interest for House Property Income

Section 24 of the Income Tax Act allows deductions on the income earned from house property — including interest paid on home loans taken for purchase, construction, repair or reconstruction. For self-occupied properties, this is one of the most significant deductions available to salaried individuals. Here is the complete guide.

Section 24(a) — Standard Deduction of 30%

For any let-out or deemed let-out property, a standard deduction of 30% of Net Annual Value (NAV) is allowed for repairs, maintenance and other expenses — without any proof of actual expenditure. This is applicable only for let-out properties; for self-occupied properties, NAV is zero so this deduction is not relevant.

Section 24(b) — Interest on Home Loan

For Self-Occupied Property:

• Maximum deduction: ₹2 lakh per year
• Conditions: Loan must be taken on or after April 1, 1999 for purchase/construction; property must be completed within 5 years from the end of the FY in which the loan is taken
• If property is not completed within 5 years: maximum deduction is only ₹30,000
• Loan for repair/renovation: maximum ₹30,000 (not ₹2 lakh)

For Let-Out or Deemed Let-Out Property:

• There is no upper limit — the entire interest paid is deductible from house property income
• If house property income becomes negative (loss), it can be set off against other income (up to ₹2 lakh per year) under Section 71(3A)
• Remaining unabsorbed loss is carried forward for 8 years

Pre-Construction Interest

Interest paid during the construction period (before possession) is called "Pre-construction interest." This cannot be claimed in the year it is paid. Instead, it is aggregated and claimed as a deduction in 5 equal installments starting from the year of completion/possession, subject to the overall ₹2 lakh cap for self-occupied property.

Joint Home Loan — Both Co-Borrowers Claim

If a home loan is taken jointly, each co-borrower who is also a co-owner of the property can independently claim up to ₹2 lakh interest deduction (for self-occupied) — effectively allowing a family to claim up to ₹4 lakh combined on a joint loan.

Section 24 and the New Tax Regime

Section 24(b) deduction on home loan interest for self-occupied property is NOT available under the New Tax Regime (Section 115BAC). Only let-out property interest continues to be deductible under the new regime (as it reduces house property income — not separately as a deduction).

Conclusion

Section 24 provides substantial tax relief for home loan borrowers — but only under the old tax regime for self-occupied properties. SPOTON ensures correct computation of house property income and home loan deductions in client ITRs. Contact us for expert income tax return filing and home loan tax advisory services.