Under construction House How to Claim Tax Deduction on Home Loan Interest Payments (2)

Having said all these, it is important <strong>to</strong> be aware of the fact that the assessee who
enjoyed tax deductions is bound <strong>to</strong> repay the deduction amounts in case if he/ she
sell the property within 5 years from the end of Financial Year in which possession of
house has been obtained. The deductions will be reclaimed by the Indian
Government under Section 80C during the financial year when the house property
was sold. If the home loan taken is not for self-occupation purpose then whole
interest amount can be claimed as tax deductions under Section 24. There is no
maximum limit for claiming tax deductions for not self-occupied property.<strong>Tax</strong>
deductions under Section 24 are for interest on home loan and this is on accrual
basis. Thus all deductions have <strong>to</strong> be claimed under Section 24 the same year even if
no payment is made. It is also important that the <strong>construction</strong> of house should be
completed within 3 years of taking loan. <strong>Tax</strong> deduction on interest beyond this
period is not applicable.
<strong>Deduction</strong>s Allowed under Section 24 for Interest Payments made on Home Loans
Type of
Property
Self-Occupied Property
Not Self Occupied Property
Completion
Status
Completed
within 3 years
Not completed
within 3 years
Completed
within 3 years
Not completed
within 3 years
<strong>Deduction</strong>
Allowed
Rs. 1,50,000 Rs. 30,000 No Limit No Limit
Summary of <strong>Tax</strong> Benefits available on Home Loans in India under Section 24 and
Section 80C
Particulars Section 24 Section 80C
<strong>Tax</strong> <strong>Deduction</strong>
allowed for
Interest
Principal