Definition
Section 24(b) Home Loan Interest
Section 24(b) lets homeowners deduct the interest paid on a home loan from their income from house property.
Under Section 24(b), interest on a housing loan for a self-occupied property is deductible up to a specified annual cap, provided the construction is completed within the prescribed period. For a let-out (rented) property the interest deduction is effectively uncapped against the rental income, though the overall house-property loss you can set off against other income in a year is limited.
This is distinct from the principal repayment, which is claimed separately under Section 80C. First-time buyers have, in past years, also had access to extra interest deductions under sections like 80EE/80EEA for loans sanctioned in specified windows.
The Section 24(b) self-occupied benefit is generally an old regime feature; under the new regime the loss from a self-occupied house cannot be set off. Compare both regimes if you carry a large home loan.
Related terms
- Old vs New Tax RegimeIndia offers two personal income-tax regimes: the old one with various deductions and exemptions, and the new one with lower slab rates but most exemptions removed.
- EMI (Equated Monthly Instalment)An EMI is the fixed monthly payment you make to repay a loan, combining both principal and interest.
- Loan AmortizationAmortization is the process of paying off a loan through scheduled instalments, with each payment split between interest and principal.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.