Income Tax Exemption Calculation for Interest paid on Housing Loan

Revised Income Tax Exemption Calculator for Interest paid on Housing Loan – Income or Loss or House Property Calculation under Section 24 of the Income Tax Act.

After enactment of Finance Act 2014, maximum housing loan interest amount (Interest on house property) which can be deducted from the income of a tax payer under Section 24 of the Income Tax Act in respect of self occupied house, is Rs. 2 Lakhs (Rs. 2,00,000).

Also there is no limit specified for deduction of home loan interest amount from income in the case of House property being rented out.

How to calculate Income / loss on House Property (Deduction of Home Loan Interest from Total Income) ?

In the case of Self Occupied House Property:

Actual annual value of Interest paid on Home loan or Rs. 2,00,000 whichever is maximum

In the case of House Property rented out:

  1. Actual annual value of Interest paid on Home loan
  2. Add annual rental value of the house property
  3. Less House property Tax paid
  4. Less Rebate 30% of the Annual Value of Rent as Repairs and Maintenance

Section 80EE reintroduced in Finance Act 2016

As per Finance Act 2016, the tax payer is entitled to claim additional deduction of Rs. 50,000 under Section 80 EE if you are a first time home buyern interest. This deduction is over and above the Rs 2 lakhs limit under section 24 of the income tax act. Read more about deduction of Rs 2 lakhs on interest on home loan here.

Section 80EE was introduced effective 2013-14 and was available for 2 years, FY 2013-14 and FY 2014-15 only (assessment year 2014-15 and 2015-16). However, this section has been reintroduced effective FY 2016-17 (assessment year 2017-18).

Who can avail this Deduction?

  • This is the 1st house you have purchased
  • Value of this house is Rs 50 lakhs or less
  • Loan taken for this house is Rs 35 lakhs or less
  • Loan has been sanctioned by a Financial Institution or a Housing Finance Company
  • Loan has been sanctioned between 01.04.2016 to 31.03.2017
  • As on the date of sanction of loan no other house is owned by you

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