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Published on:
March 21, 2023
By
Prudhvi raj

Deductions From House Property Income – Section 24

Deductions From House Property Income – Section 24 of the Income Tax Act

Are you a homeowner looking to save on taxes? Do you know that you can claim certain deductions on the income you earn from your house property? Yes, you heard it right! Under Section 24 of the Income Tax Act, you can claim deductions on the income earned from your house property. In this blog, we will take a detailed look at the deductions that can be claimed under Section 24.

1.Deductions Allowed Under Section 24

A.Interest on Home Loan:

The most significant deduction that can be claimed under Section 24 is the interest paid on a home loan taken for acquiring, constructing, repairing, renewing, or reconstructing the property. The maximum amount that can be claimed as a deduction is up to Rs. 2 Lakhs for a self-occupied property and up to Rs. 30,000 for a let-out property.

B.Repairs and Maintenance:

The expenses incurred towards the repair and maintenance of the property can also be claimed as a deduction under Section 24. However, the expenses must be reasonable and not excessive.

C.Municipal Taxes:

The municipal taxes paid for the property can also be claimed as a deduction under Section 24.

D.Standard Deduction:

A standard deduction of 30% of the net annual value (NAV) of the property can be claimed as a deduction under Section 24.

E.Depreciation:

Depreciation on the property can also be claimed as a deduction under Section 24. The rate of depreciation is specified by the Income Tax Department and is calculated on the cost of construction or acquisition of the property.

In conclusion, Section 24 of the Income Tax Act provides several deductions that can help homeowners save on taxes. It is essential to understand the provisions of Section 24 and make the most of the deductions available. Remember to keep all the necessary records and documents in place to support your claim for deductions under Section 24.

We hope this blog has been informative and has helped you understand the deductions that can be claimed under Section 24 of the Income Tax Act. If you have any queries or need further assistance, do not hesitate to reach out to a tax expert or a financial advisor.

2.Pre-Construction Interest:

Pre-construction interest refers to the interest paid on a home loan taken for acquiring or constructing a property, before the property is ready for possession. This interest can be claimed as a deduction under Section 24 of the Income Tax Act in India.

The maximum amount of pre-construction interest that can be claimed as a deduction is up to Rs. 2 Lakhs for a self-occupied property and up to Rs. 30,000 for a let-out property. However, the deduction can only be claimed in 5 equal installments starting from the financial year in which the construction of the property is completed.

It is important to keep all the necessary records and documents in place, such as the loan agreement, receipts of interest payment, etc. to support the claim for pre-construction interest deduction.

It is recommended to consult a tax expert or financial advisor to understand the provisions of Section 24 of the Income Tax Act and to ensure that the deductions claimed are in compliance with the provisions of the Income Tax Act.

3.Conditions for Claiming Interest on Home Loan:

The following are the conditions for claiming the interest on a home loan as a deduction under Section 24 of the Income Tax Act in India:

a. The loan must be taken for acquiring, constructing, repairing, renewing, or reconstructing the property.

b. The maximum amount of interest that can be claimed as a deduction is up to Rs. 2 Lakhs for a self-occupied property and up to Rs. 30,000 for a let-out property.

c. The interest must be paid during the financial year for which the deduction is claimed.

d. The property must be in the possession of the assessee and should not be used for any commercial purposes.

e. In the case of a let-out property, the assessee must have received rent for the property during the financial year.

f. The interest must be paid on a home loan taken from a financial institution or a housing finance company.

It is important to note that the conditions for claiming the interest on a home loan as a deduction may change from time to time, and it is recommended to consult a tax expert or financial advisor to stay updated on the latest provisions of the Income Tax Act.

4.Computation of Income Under House Property:


The computation of income under house property involves calculating the total income earned from a property and then reducing the expenses incurred towards the property to arrive at the taxable income. The following steps are involved in the computation of income under house property:

A.Determine the Net Annual Value (NAV):

The NAV of a property is calculated by subtracting the municipal taxes paid from the rent received or the expected rent that the property could have received if it were let out.

B.Calculate the Total Income:

The total income from the property is calculated by adding the NAV and any other income received from the property, such as rent received from a garage, if any.

C.Deduct the Expenses:

The expenses incurred towards the property can be claimed as deductions from the total income to arrive at the taxable income. Some of the common expenses that can be claimed as deductions are interest on a home loan, repairs and maintenance, municipal taxes, standard deduction, and depreciation.

D.Deduct the Losses:

If the taxable income from the property is negative, it is treated as a loss under house property, which can be set off against any other income earned by the assessee in the same financial year.

It is important to note that the computation of income under house property is subject to certain conditions and limits specified by the Income Tax Act. Hence, it is recommended to consult a tax expert or financial advisor to ensure that the computation of income is in compliance with the provisions of the Income Tax Act.

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