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Ask The Tax Expert

Principal deduction u/s 80C vs. Interest deduction u/s 24(b)

Q: I already have a housing loan which I had taken in 1999. I am claiming the principle and interest amount to get the tax relief benefit even now. In 2008 I have again borrowed a housing loan for renewal against the same property. My question is can I claim tax relief for the housing loan borrowed for renewal along with the housing loan borrowed while purchasing the same house simultaneously?

      

A: Benefit under section 80C for principal deduction of the housing loan EMI is not allowed if the home loan borrowing is for the purpose of reconstruction/renewal/repair of house property. Tax benefit under section 80C is allowed only for acquiring or constructing a new home and is not for alteration of an existing house.

       
In contrast, deduction for Interest is allowed under section 24(b) even for the loan taken for the purpose of reconstruction/renewal/repair of existing house property but subject to the limit of Rs 30,000 in case of self-occupied house property. In case of let out house property, actual interest is allowed without any ceiling.

       
In your case, we are assuming that your house is self occupied. You can continue to claim Deduction under section 80 (c) for your previous loan in 1999 for purchase of house property but not loan for renewal of house which you have taken in 2008. Further, Interest deduction u/s 24 (b) can be claimed for both loans subject to the above limits.

     

Warm Regards,

From Your Expert @ TaxYogi

Published Jan 07 2010




Comments

Comments

 

AUM Financial Advisors said:

Thanks for detailed description on the vital topic. I do believe to avail Tax deduction from total income as allowable in Income Tax Act, investment u/s 80c  is a pivot investment avenues &/or contributions.  

March 7, 2011 2:49 AM
 

sanjeev said:

What is the section for home loan emie return and how much limit of emie per annum for rebate in income tax and what is the section of home loan interest rebate and maximum limit of  home loan

March 22, 2011 6:31 AM
 

subhash patel said:

i have taken two housing loan and my question is get the claim of principal & interest in both loan in u/s 80C

March 26, 2011 8:08 AM

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