Condition to Claim Deduction of House Loan Interest u/s. 24(b) for Asstt. Year 2014-15

There are two main benefits which are available under Income Tax Act, 1961 in relation to Purchase or Construction of House Property which are described as under:

1. Deduction of Interest on Capital borrowed for purchase or construction of House Property under Section 24 (b) of the Income Tax Act, 1961. (Interest paid by house owner on housing loan)
2. Principle amount paid towards Housing loan for purchase or construction of House Property under Section 80 C of the Income Tax Act, 1961.
3. The amount stamp duty/ Registration charges paid while acquiring property will be allowed deduction U/s 80C.

Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-

1. the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.
2. The quantum of deduction allowed as per table below:

Sl. No.	Purpose of borrowing capital	Date of borrowing capital	Maximum Deduction allowable
1	Repair or renewal or reconstruction of the house	Any time	Rs. 30,000/-
2	Acquisition or construction of the house	Before 01.04.1999	Rs. 30,000/-
3	Acquisition or construction of the house	On or after 01.04.1999	Rs. 1,50,000/-

In case of Serial No. 3 above

• The acquisition or constructing of the house should be completed within 3 years from the end of the Fin. Year in which the capital was borrowed. Hence it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
• Further any prior period interest for the Fin. Years upto the Fin. Year in which the property was acquired and constructed shall be deducted in equal installments for the FY in question and subsequent four Fin. Years.
• The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.

Interest Paid towards housing loan:
The house property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount payable towards interest on borrowed capital is allowed as deduction under u/s 24(b) of Income tax act.

1. We have to note here Interest payable on barrowed capital is allowed (Interest paid is irreverent here).
2. In case of under construction property, Interest will aggregated from the date of borrowing till the end of the previous year prior to the previous year in which the house is completed and allowed in five successive financial years starting from the year in which the acquisition or construction was completed.
3. In case Assesses is owner of more than one residential property, he may exercise an option to treat any one of the houses to be self occupied and the other houses will be deemed to be let out and annual value of such house will be determined as per Section 23(1)(a) of the Income Tax Act, 1961.

Principle Amount paid towards Housing Loan:
Any payment made for purchase or construction of a residential house property which is chargeable to tax under the head “Income from House Property” towards any installment or part payment due to any Bank, Financial Institution, Company or Co-Operative Society towards the cost of the house property allotted to him is allowed as deduction U/s 80 C of the Income Tax Act, 1961 to the extent of Rs. 1,00,000 along with other Specified Investments mentioned under Section 80 C of the Income Tax Act, 1961.

Stamp Duty and Registration Charges for a home:
The amount you pay as stamp duty or registration fee when you buy a house can be claimed as deduction under section 80C in the year of purchase of the house.