Glossary · Real Estate & RERA
Section 24(b)
Income Tax provision allowing a deduction of up to ₹2 lakh per year on interest paid on a self-occupied home loan.
Under Section 24(b) of the Income Tax Act, interest on a loan taken for purchase, construction, or repair of a house property is deductible from the income from house property. For a self-occupied property, the maximum deduction is ₹2 lakh per year (only interest, not principal). For a let-out property, the entire interest paid is deductible without any cap. The construction must be completed within 5 years from the end of the financial year in which the loan was taken, otherwise the deduction is limited to ₹30,000. The deduction is available from the year the property is constructed or acquired.
Examples
A self-occupied flat with a ₹40 lakh home loan at 8.5% interest claims Section 24(b) deduction of up to ₹2 lakh per year, fully exempting the property from income tax.