Tax Deduction on Home Loans in India

You can own several types of properties, but can call only one of them a self occupied property. A house is self occupied if you’ve used it throughout the previous year for residential purposes and not leased it out or used it for business purposes. Tax can be saved on the interest paid on the home loan and on loans taken for its repair. A Maximum Deduction of Rs. 30000 is given for the interest paid on loans taken for repairs and a maximum deduction of Rs. 150000 is given for the interest paid on home loans. However, the total of both cannot exceed Rs. 1,50,000 per financial year. Pre-construction interest is interest paid on the home loan before the property is actually constructed. After the completion of construction, the pre-construction interest accrued, is taken as an equally divided deduction over 5 years. This interest is allowed as a deduction over and above the interest paid on the home loan during the year. Any property, which is given on rent, is called a let out property. Any interest paid on the home loan or on the loan taken for the repair of a let out house property is allowed as a deduction without any limit on the interest paid.If you have more than 1 property and if any one of these properties are either self occupied or let out and if any of the other properties are unoccupied, then such unoccupied properties are called deemed let out properties.Any interest paid on the home loan or on the loan taken for the repair of a deemed let out house property is allowed as a deduction without any limit on the interest paid.

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