Section 24(b)

What Does Section 24(b) Cover?

This section allows you to claim a deduction on the interest portion of your home loan EMI. It does not apply to principal repayment—that falls under Section 80C.

• For self-occupied properties, the deduction is capped at ₹2 lakh per annum.

• For rented properties, there is no upper limit, but the total loss from house property that can be set off against other income is restricted to ₹2 lakh.

Eligibility Criteria

• The loan must be taken for the purchase, construction, renovation, or repair of a residential property.

• It should be taken on or after 1 April 1999 to claim the full ₹2 lakh deduction for self-occupied homes.

• You must obtain an interest certificate from the lender as proof of interest paid.

• If the property is under construction, interest paid during the construction period can be claimed in five equal installments starting from the year construction is completed.

Example

Let’s say you own a self-occupied house and paid ₹2.5 lakh in home loan interest in a financial year. Under Section 24(b), you can claim a maximum deduction of ₹2 lakh. This reduces your taxable income by ₹2 lakh, helping you save up to ₹62,400 in taxes if you fall in the 31.2% tax bracket.

Benefits of Section 24(b)

• Tax Relief: Helps reduce your taxable income and ease the cost of borrowing.

• Applies to Both Property Types: Whether you live in the house or rent it out, you can claim interest deductions.

• Supports New Construction: Pre-construction interest is also deductible, offering additional savings.

Challenges to Consider

• Not Available Under the New Tax Regime: If you opt for the simplified regime under Section 115BAC, this deduction is not allowed.

• Time-Bound Construction: To claim the full ₹2 lakh deduction, the construction must be completed within five years from the end of the financial year in which the loan was taken. Otherwise, the limit drops to ₹30,000.

• Documentation Requirement: Without a valid interest certificate, the deduction cannot be claimed.

Conclusion

Section 24(b) is one of the key tax benefits available to homeowners under the old tax regime. In 2025, as interest rates and housing costs remain a major financial consideration, this provision continues to offer meaningful relief. For best results, ensure you have all required documents, meet the construction timeline, and choose the tax regime that aligns with your financial goals.