IF home loan is taken for the purpose of purchase, construction, repair, renewal or reconstruction, interest there on is allowed on accrual basis under section 24 of Income tax Act,1961

As per section 24 of Income tax Act, Maximum amount of Interest  permissible in case of self occupied property is Rs.1,50,000 per co owner subject to actual Interest paid if the following conditions are satisfied;

1. Home loan is taken on or after 1st April, 1999 for acquiring or constructing a property.
2. Loan taken prior to 1st April, 1999 is eligible for maximum deduction of  Interest up to Rs.30000 only.
3. Acquisition/Construction should be completed within three years from the end of financial year in  which capital is borrowed. e.g. loan is borrowed on 2nd July, 2005 hence acquisition or construction should be completed by 31st March, 2009 i.e. three years from 31st March, 2006.
4. Person has to certify that Loan is taken for acquisition or construction of house or to repay principal amount outstanding under previously taken loan for acquisition or construction.
5. However for repairs, renewal or reconstruction maximum deduction of Rs.30000 is allowed and not Rs.150000.

Co ownership

E.g.IF person and his wife is co owner of house property then deduction of Rs.150000 is allowable to both husband and wife. Please note following points in this regards;
1.  Ceiling of Rs.150000 is set for Self occupied property.
2. Persons should be co owner of property and their names should be mentioned in registered sale deed.
3. Their share of property should mention in sale deed in the absence of any such information ownership deemed to be equal between all co owners.
4. For claiming home loan interest deduction, each co owner must have taken loan jointly.
5. If persons have taken loan from more than one bank but for the same house property then also deduction is allowed.

Apart from Home loan interest deduction, persons can claimed deduction U/s 80 C for repayment of principal on home loan within overall limit of Rs.1,00,000 per person. 

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Housing loans are provided in India for a long period to repay the loan, most probably up to 20 years. The interest rates also vary from city to city as well as company to company. The interest rate may also depend on the time taken to repay the loan amount. The home loan lenders in India first of all will go through the financial status of the customers who require the home loan before providing it.


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