What is Section 24 – Income Tax Deductions from House Property

Owning a house comes with benefits, including tax savings. Section 24 income tax provisions allow individuals to claim deductions on income earned from house property. This section is particularly beneficial for those with home loans, as it reduces taxable income by accounting for interest paid. 

By understanding how income tax deduction under Section 24 works, taxpayers can optimise their savings while fulfilling their financial obligations.

Section 24 Income Tax Explained

Section 24 income tax falls under the Income Tax Act, 1961. It allows taxpayers to claim deductions on income generated from house property. The deductions are primarily related to interest on home loans and standard maintenance expenses. There are two main components:

1. Standard Deduction
   Under this provision, 30% of the net annual value (NAV) of the property can be claimed as a standard deduction. This is applicable for rented properties and excludes municipal taxes. It covers general maintenance costs without requiring specific proofs or invoices.
2. Deduction on Interest Paid
   Taxpayers can claim deductions on interest paid on home loans. For self-occupied properties, the limit is ₹2,00,000 annually. For let-out properties, there is no upper limit, but the overall loss from house property that can be adjusted against other income sources is capped at ₹2,00,000.

Eligibility for Income Tax Deduction under Section 24

To claim income tax deduction under Section 24, certain conditions must be met:

• The property can be self-occupied or rented out.
• For self-occupied properties, the loan must have been taken for purchase, construction, or repairs.
• The construction or acquisition must be completed within five years from the end of the financial year in which the loan was taken.

Meeting these criteria ensures taxpayers can benefit from significant savings under Section 24 income tax provisions.

Benefits of Section 24 Income Tax

The provisions of Section 24 income tax offer financial relief to property owners, especially those repaying home loans. The deductions reduce taxable income, allowing individuals to save money. The standard deduction simplifies tax filing, while the interest component ensures homebuyers are rewarded for their investment.

For landlords, these deductions improve rental income returns by offsetting costs. Homeowners with multiple properties can also benefit, as deductions apply to all eligible properties.

The Final Word

Section 24 income tax deductions make owning a house more financially viable. Whether through standard deductions or interest repayment benefits, taxpayers can reduce their burden significantly. Understanding income tax deduction provisions ensures property owners maximise savings while complying with legal obligations. By leveraging these benefits, homeowners can turn their property investment into a tax-efficient asset.