I am currently working in Mumbai. I am currently residing in a rented apartment and looking forward to purchasing a flat for investment purposes in Bhubaneshwar, for which I will take a home loan. This will be the first house purchased by me. I will put it on rent. I would like to know whether I can avail myself of any tax benefit from a home loan. What will be the amount of benefit which I would be able to claim? Will there be any difference if I reserve it for my occupation?
The extent of tax benefits for home loans would depend on whether you opt for a new or old tax regime. Regarding the home loan, the income tax laws allow you two deductions. The first deduction, which is available under the old tax regime only, is for repayment of the home loan under Section 80 C, along with other items like LIP, School fees, EPF, PPF, ELSS, and NSC. This deduction is up to ₹1.5 lakh for all the items taken together. This deduction is available whether the house is self-occupied or let out.
The extent of tax benefits for home loans would depend on whether you opt for a new or old tax regime. Regarding the home loan, the income tax laws allow you two deductions. The first deduction, which is available under the old tax regime only, is for repayment of the home loan under Section 80 C, along with other items like LIP, School fees, EPF, PPF, ELSS, and NSC. This deduction is available up to an amount of ₹1.5 lakh for all the items taken together. This deduction is available whether the house is self-occupied or let out.
The extent of tax benefits for home loans would depend on whether you opt for a new or old tax regime. Regarding the home loan, the income tax laws allow you two deductions. The first deduction, available under the old tax regime only, is for repayment of the home loan under Section 80 C, along with other items like LIP, School fees, EPF, PPF, ELSS, and NSC. This deduction is available up to ₹1.5 lakh for all the items taken together. This deduction is available whether the house is self-occupied or let out.
New Tax Regime: No interest deduction for self-occupied homes
The other benefit is available in respect of interest paid on a home loan under Section 24(b). Under the new tax regime, no tax benefit for interest is available for self-occupied property, whereas in the case of let-out property, the deduction would be restricted to the amount of taxable rent.
The quantum of deduction available under the old tax regime depends on whether the house is self-occupied or let out. A deduction of up to ₹2 lakh is available if the house is self-occupied. However, if the house is let out, you can claim full interest paid against rental income (Calculated after a standard deduction of 30% from rent). Still, you will be able to set off loss under the head “Income from house property” against income under other heads to the extent of Rs. 2 lakhs only during the same year, and the balance unabsorbed loss shall be carried forward forest off against house property income in eight subsequent years.
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Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on his X handle.
Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
