Computation of Income from House Property- Deduction of Interest u/s 24(b)

Income like rent on house property, annual value of property “deemed” to be let out are considered as income from House Property and is taxable in hands the hand of the Assessee.

Deduction of interest on borrowed capital while computing the Income from House Property is allowed as follows:

  • House Property is self-occupied: Deduction of up to Rs 2.00 Lakhs can be availed
  • House Property is let-out: Full amount of interest can be claimed as deduction. With effect from FY 2017-18 if the deduction of interest results in a loss then only up to Rs 2,00,000 can be set off from the other heads of income, balance can be carried forward for up to 8 assessment years.

Section 80EE and Sec 80EEA have been introduced in lately to provide deduction of interest over and above Sec 24(b). The deduction in this case shall be provided from the Gross Total Income.

  1. Section 80EE – Deduction amounting to Rs 50,000 is allowed in addition to deduction under section 24(b)
  • The loan should be sanctioned between 1st April 2016 – 31st March 2017.
  • The value for the property should not exceed Rs 50 lacs and the sanctioned loan amount should not exceed Rs 35 lacs.
  • The purchaser should be a first time homebuyer also; this is applicable only in case of residential house property.
  • The benefit will be applicable till the time of repayment of loan continues.
  • Deduction can only be claimed by individuals for the house purchases jointly or singly
  1. Section 80EEA – Additional deduction amounting to Rs 1,50,000 is allowed in addition to deduction under section 24(b)
  • The loan should be sanctioned between 1st April 2019 – 31st March 2020.
  • The stamp duty value of the house should not exceed Rs 45 lacs.
  • The carpet area of the house should not exceed 60 sqmtr in metro cities and 90 sqmtr in other cities.
  • Only an individual is allowed to claim the deduction under this section provided he does not own any other house property.
  • Deduction can only be claimed by individuals for the house purchases jointly or singly
Authored By – CA Anushka Saraogi 

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