Income Tax  deduction on Housing Loan

Income Tax deduction on Housing Loan


Housing finance availed by individuals for residential property from a bank or housing finance company has multiple benefits. There is a rate war going on in Housing Loan Segment. SBI is offering 8.9% per annum, IOB is offering 8.65% and Bank of Baroda has come out with 8.35% pa. If you have not yet invested in house property, it is the right time to invest.

The repayment principal amount of loan, up to the Rs.150000.00 in a financial year, enables you to get tax rebate up u/s 80 ( c ) of IT Act.  following are the major benefits to the investment in-house property on bank finance.

  1. Stamp duty paid and registration fee paid on property purchased can also be included for tax rebate within the overall limit under section 80C is up to Rs.150000 in a financial year.
  2. In the Finance Act 2017 announced on 1st Feb 2017,the maximum tax deduction on interest paid on housing loan under Section 24 of a self-occupied property is  Rs. 2 Lakhs (increased in Budget 2014 from 1.5 Lakh ( Budget 2014)  to Rs. 2 Lakhs).
  3. The deduction allowed to first time home buyers  under section 80EE earlier was limited to maximum Rs 1lakh in total and was available for only 2 financial years. However, this section has been reintroduced effective FY 2016-17 (assessment year 2017-18).Now the deduction  is allowed up to Rs 50,000 per year starting  from FY 2016-17 and subsequent years until the loan is repaid. For claiming this deduction loan must be taken from a financial institution for purchasing ther first residential house property value of which shall not be more than Rs.50 lakh and loan amount shall not exceed Rs.35 lakh.
  4. The appreciation value of house property is high in city/urban areas.
  5. If you think to buy a residential property purely on investment purpose, then it is a good idea to buy residential property in a city/urban area as appreciation on properties faster compared to rural/semi-urban areas and you may get good rent in the urban area if you are not occupying the same.

Click here to knowHow-to-examine-title-deeds-of-house-property’

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