Question: I have taking a 5 lakh loan for renovating my home which is in the joint name of my mother (my dependent) and me. Am I eligible for a tax rebate?
Answer: Benefit under section 80C for principal deduction of the housing loan EMI is not allowed, if the home loan is for the purpose of reconstruction, renewal or 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 a loan taken for the purpose of reconstruction, renewal or 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.