Home › Tax Saving › Section 24(b)
Home loan interest deduction up to ₹2L
Interest paid on a home loan is deductible from rental / salary income — up to ₹2L per year for a self-occupied property, with no upper limit on let-out properties.
Maximum deduction
₹2,00,000 (self-occupied) / no limit (let-out, with set-off cap)
Who can claim
Owner of a house property who has taken a home loan from a bank, NBFC, or specified employer/PSU. Both regime taxpayers can claim — but only for let-out property in the new regime; self-occupied interest deduction is disallowed in the new regime.
How it works
Section 24(b) of the Income Tax Act allows deduction for interest on borrowed capital for purchase, construction, repair, or reconstruction of a house property. For self-occupied (you or family lives there), the limit is ₹2,00,000 per year if construction is completed within 5 years of loan disbursement; otherwise it falls to ₹30,000. For let-out (rented) property, the entire interest is deductible against rental income, but the loss that can be set off against other heads (like salary) is capped at ₹2,00,000 — excess loss is carried forward 8 years.
Eligible instruments
Home loan from scheduled banks / housing finance companies (HDFC, LIC HFL, etc.)
Loan from employer / public financial institution
Refinance / balance transfer of an existing home loan
Loan for purchase, construction, repair, renewal, or reconstruction
Documents you'll need
Interest certificate from lender (annual)
Possession certificate / completion certificate (proves 5-year construction window)
Property tax receipt (deductible from rental income separately)
Rental agreement (for let-out claim)
Worked example
Self-occupied flat. Loan EMI ₹45,000/month. Interest portion in FY: ₹3,80,000. Principal: ₹1,60,000.
Section 24(b) deduction: capped at ₹2,00,000 (self-occupied limit). Section 80C deduction (principal): capped at ₹1,50,000. Total deductions: ₹3,50,000.
In 30% slab: ₹3,50,000 × 30% = ₹1,05,000 + cess = ~₹1,09,200 saved.
Common mistakes to avoid
Claiming under new regime for self-occupied — disallowed; only let-out qualifies
Claiming interest before possession — only allowed in 5 equal instalments after possession (pre-construction interest)
Confusing principal (80C, ₹1.5L) with interest (24(b), ₹2L) — they're separate deductions
Missing the 5-year construction rule — exceeds 5 years and limit drops to ₹30,000
FAQ
Both spouses are co-owners and co-borrowers — how is the deduction split?
In proportion to the loan repayment share. If 50:50, each can independently claim up to ₹2L interest under 24(b) — total household claim ₹4L.
Can I claim 24(b) on a second home?
Yes. From FY 2019-20, two house properties can be treated as self-occupied. Combined 24(b) limit is still ₹2L. A third property must be deemed let-out.
Loan from family / friend — can I claim 24(b)?
Yes, if it's a genuine loan with interest, repayment schedule, and you obtain an interest certificate from the lender. But proceed carefully — scrutiny is common.
Pre-construction interest — how is it claimed?
Interest paid before possession is aggregated and claimed in 5 equal instalments starting from the year of possession, within the ₹2L overall limit.
Related sections
Need help claiming this?
Our chartered accountants will plan and file it for you.
