What Is Section 24(b)?

Section 24 b of the Income Tax Act allows taxpayers to claim a home loan interest tax deduction on the interest paid for a housing loan taken to purchase, construct, repair, renew, or reconstruct a house property.

In short, 24 b income tax provisions reward you for owning and financing a home — not just for living in it, but even for renting it out.

This deduction applies only to the interest component of the home loan, not the principal repayment (which falls under Section 80C).

Home Loan Interest Deduction: How It Works

Under the home loan interest deduction section, the interest you pay every year reduces your taxable income.

Here’s the basic idea:

• You earn income
• Interest paid on your home loan is deducted
• Tax is calculated on the reduced income

This is why tax deduction on home loan interest Section 24 is considered one of the most powerful tools for salaried individuals and self-employed professionals.

Deduction Under Section 24(b): Maximum Limit

The section 24b maximum limit depends on how the property is used:

1. Self-Occupied Property

• Maximum deduction: ₹2,00,000 per year
• Applies only if construction is completed within 5 years from loan sanction

2. Let-Out or Deemed Let-Out Property

• No upper limit on interest deduction
• However, loss from house property that can be set off against other income is capped at ₹2,00,000 per year
• Excess loss can be carried forward for 8 years

This is why many investors strategically plan rentals along with long-term appreciation.

Section 24(b) Eligibility Criteria

To claim section 24b eligibility, the following must be met:

• Loan must be taken from a bank, housing finance company, or recognized institution
• Loan must be used for purchase, construction, or renovation
• Interest certificate from lender is mandatory
• Property should be completed (for full deduction)

If the property is under construction, interest paid during that period is not lost, it is accumulated and allowed in five equal installments after completion.

Section 24(b) Conditions You Must Know

Understanding section 24b conditions avoids rejection during assessment:

• Construction must be completed within 5 years to claim ₹2 lakh limit
• Deduction is available only to the owner of the property
• Joint owners can claim separately based on ownership share
• Interest deduction applies only after possession

Ignoring these conditions often leads to partial or full loss of benefits.

Home Loan Interest Tax Benefit vs Other Sections

Many taxpayers confuse home loan interest tax benefits with principal repayment benefits.

Here’s the clear distinction:

• Section 24(b) → Interest paid on loan
• Section 80C → Principal repayment, stamp duty, registration

Together, they create a powerful house loan benefit in income tax, reducing both short-term and long-term tax liability.

24(b) Deduction for Under-Construction Property

If you’ve purchased land and are planning construction later (common for buyers of plotted developments), interest paid before construction completion is treated as “pre-construction interest.”

This amount:

• Is accumulated
• Allowed in 5 equal installments
• Claimed under 24 b deduction after completion

This is especially relevant for buyers investing in developing areas where construction is planned in phases.

Income Tax Benefit on Home Loan Interest for Joint Owners

If a property is jointly owned, each co-owner can independently claim:

• Up to ₹2 lakh interest deduction
• Based on ownership and loan repayment share

This doubles the tax rebate for housing loan benefits for families and couples, provided the documentation is clear.

Why This Matters for Land Buyers

Many buyers today start with land and construct later. While section 24b deduction applies only to house property, early financial planning ensures:

• Loan structuring supports future construction
• Interest benefits are not lost
• Tax efficiency is built into the project

For investors considering plots in Chennai, especially in emerging zones with strong infrastructure growth, aligning purchase, construction, and loan timelines makes a real financial difference.

Common Mistakes to Avoid

• Claiming deduction before possession
• Missing completion deadline for full benefit
• Not keeping lender interest certificates
• Confusing Section 24(b) with 80C
• Assuming land purchase alone qualifies

Section 24(b) rewards planning and not assumptions.

Conclusion

Section 24(b) of Income Tax Act is an incentive designed to encourage home ownership and planned construction. When used correctly, it reduces tax outflow, improves cash flow, and strengthens long-term wealth creation.

Whether you’re building your first home or planning construction after investing in land, understanding section 24b, its limits, eligibility, and conditions ensures you don’t leave money on the table.

In real estate, smart ownership is not just about location, it’s also about financial clarity.