Introduction: Understanding Section 24(b)

A home loan is often the biggest financial commitment of our lives. While buying a house brings joy and stability, the long-term EMIs can feel overwhelming. This is why understanding the Home Loan interest deduction in ITR becomes essential. This is where tax laws—especially Section 24(b)—step in to offer relief.

But several questions usually arise:

• How much home loan interest can I claim as a deduction?
• Does the limit change based on my property type?
• What about under-construction properties?
• How do I correctly claim this deduction in my Income Tax Return?

If these questions sound familiar, you’re already thinking like a smart taxpayer. Section 24(b) isn’t complicated when simplified, and once you understand how it works, you can save a substantial amount every year.

What Is Section 24(b)?

Section 24(b) of the Income Tax Act allows taxpayers to claim a deduction on interest paid on a home loan. The loan can be taken for:

• Buying a new house
• Constructing a house
• Repairing or renovating an existing property

As financial experts often say:

“Smart tax planning doesn’t just save money—it protects your wealth.”

Section 24(b) is one such smart tool that lets you reduce your taxable income simply by repaying your home loan.

Eligibility Criteria Home Loan Deduction In ITR

Before claiming the deduction, make sure you meet the following requirements:

1. Purpose of the Loan

To be eligible, your loan must be taken for:

• Purchase
  
• Construction
  
• Repair or renovation (interest only)
  

2. Ownership of Property

You must be the owner or co-owner of the property.
Co-owners can individually claim deductions up to the maximum limit.

3. Completion of Construction

To claim the full ₹2 lakh deduction:

• Construction must be completed within 5 years from the end of the financial year in which the loan was taken.
  

4. Loan From a Valid Lender

The loan must be from:

• Banks
• Housing finance companies
• Recognized financial institutions

Loans from friends or family do not qualify.

Deduction Limits Under Section 24(b)

The key to Section 24(b) is understanding how much deduction you can claim.

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1. Self-Occupied Property

If the property is used as your residence:

• Maximum deduction: ₹2,00,000 per year
  

However, this applies only when:

• The loan is for purchase or construction
  
• Construction is completed within 5 years
  

If construction is delayed beyond 5 years:
→ Deduction drops to ₹30,000

Loans for renovation or repairs also get only ₹30,000 deduction.

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2. Let-Out Property

For properties rented out:

• No maximum limit on interest deduction
  You can claim the full interest amount.
  

However, the Income Tax Act allows only ₹2,00,000 loss adjustment against income in the same year.
Remaining loss is carried forward for 8 years.

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3. Pre-Construction Interest

Interest paid before completion of construction can also be claimed.

You can claim:

• 1/5th of the total pre-construction interest each year, for 5 years, starting from the year construction completes.
  

This benefit helps taxpayers save more during the early years of their home loan.

Section 24(b) vs 80C vs 80EEA

Section	Covers	Limit	Notes
24(b)	Home loan interest	₹2 lakh (self-occupied), No limit (let-out)	Major tax-saving benefit
80C	Principal repayment	₹1.5 lakh	Includes stamp duty & registration
80EEA	Additional interest for first-time buyers	₹1.5 lakh	Subject to conditions

How to Claim Section 24(b) in ITR

Claiming the deduction is simple but must be done carefully.

Step 1: Download the Home Loan Interest Certificate

Your lender provides:

• Total interest paid
  
• Principal repaid
  

Step 2: Identify Property Type

Choose:

• Self-occupied
• Let-out
• Deemed let-out

This determines your deduction limit.

Step 3: Fill the ITR Form

Go to:
Income from House Property → Interest on Borrowed Capital

Enter:

• Interest amount
  
• Pre-construction interest (if applicable)
  
• Annual value (rent received for let-out properties)
  

Step 4: Keep Proof Ready

No document upload is required, but the department may request it later.

Common Mistakes to Avoid

Avoid these mistakes to prevent loss of deduction or tax notices:

❌ Claiming ₹2 lakh without construction completion

If delayed past 5 years → only ₹30,000 allowed.

❌ Entering the wrong property status

This can change your deduction from unlimited to restricted.

❌ Skipping pre-construction interest

Many taxpayers forget this benefit completely.

❌ Double claiming under Section 24(b) and 80EEA

Interest cannot be claimed twice.

❌ No proof for renovation loans

Personal loans must be supported with bills or proof of usage.

Benefits of Section 24(b)

1. Substantial Tax Savings

This deduction reduces your taxable income every year.

2. Encourages Home Ownership

The government offers this benefit to make buying a home more affordable.

3. Joint Ownership Advantage

If a property is co-owned and loan is co-borrowed:

• Each owner can claim ₹2 lakh separately
• Total possible benefit = ₹4 lakh
  

4. Long-Term Financial Ease

Since home loans last for decades, this deduction offers consistent annual savings.

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Practical Example

Assume:

• Total interest paid: ₹2,70,000
  
• Property type: Self-occupied
  

Deduction you can claim = ₹2,00,000
Remaining ₹70,000 cannot be claimed.

If the property is let-out:Full ₹2,70,000 can be claimed But only ₹2,00,000 can be set off this year Balance is carried forward for up to 8 years

Final Thoughts

Let’s answer the questions raised earlier:

Can you save tax on home loan interest?
→ Yes, Section 24(b) is specifically designed for this.

Does the deduction depend on property type?
→ Absolutely. Self-occupied and let-out homes have different limits.

Is the process complicated?
→ Not at all—just follow the steps and use your interest certificate.

Is Section 24(b) beneficial?
→ Definitely. It eases the financial burden of home loans and ensures smarter tax planning.

At its core, Section 24(b) transforms your home loan from a financial responsibility into a powerful tax-saving opportunity. When paired with Sections 80C and 80EEA, it can significantly reduce your overall tax liability and strengthen your long-term financial planning.