Income/Loss from House Property

One of my senior friends, who constructed a house ten years ago after borrowing House Building Advance asked me last week, whether interest accrued in respect of Housing loan during the year 2008-09, but payable on a later date (as per the House Building Advance recovery procedure) could be deducted from the Income for Income tax purposes during the year 2008-09.

Update: 25th September 2017: Income Tax Exemption on Interest Paid on Housing Loan – Capped at Rs. 2 lakh for rented property also

Update : After Budget 2014, Income Tax Exemption / Deduction allowed from Income in respect of Interest payable on Housing Loan has been increased to Rs. 2 lakh. Click here to get Revised GConnect Calculator for Exemption for Interest paid on Housing Loan 

Update: 01.12.2016: Addtional deduction up to Rs. 50,000 under Section 80EE in resepct of First Time Home Buyers:

80EE. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential property.

(2) The deduction under sub-section (1) shall not exceed fifty thousand rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2017 and subsequent assessment years.

(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—

  (i) the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2016 and ending on the 31st day of March, 2017;

 (ii) the amount of loan sanctioned for acquisition of the residential house property does not exceed thirty-five lakh rupees;

 (iii) the value of residential house property does not exceed fifty lakh rupees;

(iv) the assessee does not own any residential house property on the date of sanction of loan.

(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year.

(5) For the purposes of this section,—

 (a) “financial institution” means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking institution referred to in section 51 of that Act or a housing finance company;

 (b) “housing finance company” means a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes.

I was surprised, when he told me that he did not deduct such interest for Income tax purposes in the previous years and was under impression it could be deducted only at the time of actual payment of interest. This made me to present this small guide for calculating Income / Loss on House Property.

Use this Calculator after going through the details given below

Interest on loans taken to buy a house is deductible under the Income Tax Act while computing income under the head ‘Income from House Property’. The relevant provisions for this are contained under Section 24 of the Income Tax Act. The interest is allowed as a deduction on accrual basis – on due basis, even if it has not actually been paid during the year.

The money can be borrowed for construction, acquisition, repair or reconstruction of property.

Maximum Limit of Interest that could be deducted : Under the Income Tax Act, for the purpose of computing income or loss under the head ‘Income from House Property’ in respect of a self-occupied house, a deduction of Rs 30,000 is allowed against interest on borrowed capital. However, a deduction on account of interest up to a maximum limit of Rs 1.5 lakhs is available if the loan has been taken on or after April 1, 1999 for constructing or acquiring the house, and the construction or acquisition has been completed within three years from the end of the financial year in which capital was borrowed. In case the property is let out, the entire amount of interest accrued during the year is deductible.

Update: 01.07.2013:

Method of calculating income or loss on house property has been changed subsequent on introduction of additional interest rebate of Rs. 1 lakh for new housing loans recieved in the year 2013-2014. Over and above the standard interest rebate Rs. 1.5 lakh this additonal interest rebate will be applicable only if the housing loan amount did not exceed Rs. 25 lakhs and that the housing loan is disbursed in the year 2013-14 (assessment year 2014-15).  The extract of Finance Bill 2013-14 which has made change in the Rebate on Interest paid on Housing Loan for certain categories is given below
Keeping in view the need for affordable housing, an additional benefit for first-home buyers is proposed to be provided by inserting a new section 80EE in the Income-tax Act relating to deduction in respect of interest on loan taken for residential house property.

The proposed new section 80EE seeks to provide that in computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property.

It is further provided that the deduction under the proposed section shall not exceed one lakh rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on 1st April, 2014 and in a case where the interest payable for the previous year relevant to the said assessment year is less than one lakh rupees, the balance amount shall be allowed in the assessment year beginning on 1st April, 2015.

It is also provided that the deduction shall be subject to the following conditions:-

(i) the loan is sanctioned by the financial institution during the period beginning on 1st April, 2013 and ending on 31st March, 2014;

(ii) the amount of loan sanctioned for acquisition of the residential house property does not exceed twenty-five lakh rupees;

(iii) the value of the residential house property does not exceed forty lakh rupees; (iv) the assessee does not own any residential house property on the date of sanction of the loan.

Annual Rental Value : The basis of calculating Income from House property is the “annual value”. It is not necessary, as we have seen earlier, that the property should actually be let. Where the actual rent received is more than the reasonable return, it has been specifically provided that the actual rent will be the annual value. Where, however, the actual rent is less than the reasonable rent , the latter will be the annual value. The municipal value of the property, the cost of construction, the standard rent, if any, under the Rent Control Act, the rent of similar properties in the same locality are all pointers to the determination of annual value. From the said annual value tax paid, From the annual value as determined above, municipal taxes are to be deducted.  Also, deduction equal to 30% of the annual value (Rental value-Tax paid), irrespective of any expenditure incurred by the taxpayer (S.24(a)).

Determination of Annual Value of Self Occupied Property : Having understood the concept of Annual Value, we can now go into the details of its actual determination. Self-occupied house property does not generate any rent. Presently, a preferential treatment is given to one self-occupied house property which has not been actually let out at any time in which case, the annual value is taken as ‘Nil’. If, one is fortunate enough to own more than one house property using all of them for self-occupation, he is entitled to exercise an option in terms of which, the annual value of one house property as specified by him will be taken at Nil.

The annual value of the other self occupied house property/ies will be determined on notional basis as if it had been let out. To analyse this let us consider two situations. A person may own a house property, in Bangalore, which he normally uses for his residence. He is transferred to Chennai, where he does not own any house property and stays in a rental accommodation.

In such a case, the house property in Bangalore cannot be used for self-occupation and notional income, therefore, would normally have been chargeable although he derives no benefit from the property. To save the tax payer from hardship in such situations, it has been specifically provided that the annual value of such a property would be taken to be nil subject to the following conditions:

  • The assessee must be the owner of only one house property.
  • He is not able to occupy the house property because of his employment, business etc., away from the place where the property is situated.
  • The property should not have been actually let or any benefit is derived therefrom.
  • He has to reside at the place of employment in a building not belonging to him.

Other Deductions : From the annual value as determined above, further deductions Tax paid on House Property and Repairs & Collection Charges subject to maximum of 30% of the Annual Value are deductible. Can there be loss under the head Income from House Property ?

This brings us to the question whether there can be any loss under this head. In so far as income from a self-occupied property is concerned and in respect of a property away from workplace, the annual value is taken at nil, no other deductions are allowed except for interest on borrowed capital upto a maximum of Rs.30,000. In such cases, there may be loss upto a maximum of Rs.30,000 (or Rs.1,50,000 as the case may be).

In respect of other type of house property, namely a house property that is let out, there are no restrictions on deductions and therefore, there can be loss under this head. Source of this article is one of the publications of Income Tax Department. Users who want check this publication can click the following link for more details

Detailed Article on Income / Loss on house property sourced from Income tax Department website


  1. Sir, as the article is fully examined the interest on house building advance I think there is no further comments

  2. can a person who do not own the land(which is in name of father),takes the loan as a coapplicant for house contruction,and lives in the home,get the benefit for interest accrued under Income/Loss from House Property for income tax

  3. I was under the impression that the 30% rebate on house rental income is to be deducted after deducting property tax if any paid to the Local Bodies . But in the example shopwn, 30% rebate was deducted on the Gross rental income and then Property tax deducted. Please clarify the correcte rule position.

  4. Dear Sir,
    I have availed house building loan along with purchase of site on Nov 2008.
    Building is still under constrction, the house is constructed at my native place and I stay in a rented house at Bangalore. I need clarification regarding, can I avail HRA rebate.

  5. I have occupied my own house after the construction during the year 2000-01. During the year 2008-09 I had to spend an amount of Rs. 35,000/- towarding painting charges including cost of paint. Kindly let me know whether I am eligible for any income tax relief for this amount. I am salaried person working in Central Government Department.

  6. I am salaried person working in Central Government Department. I purchased a Plot from Awas Vikash Parishad and take a loan for HDFC Bank for purchasing the same plot. I need clarification regarding, can I avail rebate on this Loan for Income tax purpose and also tell me in which ITR form I submit return.

  7. Can we claim Loss on Let Out Property if the said property in in the same location of Employment say Mumbai?

  8. I have an employee who has two property taken on loan. For one self occupied property, she claims the interest paid on housing loan of Rs. 1.50 lacs as Loss from House property, Claims 30000 deduction u/s 80 C towards the principal payment and also claims a loss of Rs.200000/- stating that it is loss from let out property. is this right?

  9. I availed HBA in th month of July 2000. From Financial Year 2000-01 to 2008-09, no tax relief availed under “Loss from House Property” towards the accrued interest. From November 20009 onwards, my interest on HBA will be calculated and paid. Can I avail the tax relief for repayment of interest on HBA from November 2009 to March 2010?

    Can I also avail tax relief for repayment of interest on HBA, if paid extra from the 60 per cent arrear received?
    Please let me know by return mail. Thank you.

  10. if working couples purchase a house through home loan ; what would be the % of tax rebate available to them due to this loan (in what proportion) ; what is the rule/instructions

      1. can either of claim 100% exemption on interest on hp.If yes then under which rule.

        1. If the house is self occupied interest up to Rs.150000 can be deducted from income. In the case of house property not self occupied, 100% interest element can be deducted. However, rental value of house property is required to be included if the house property is rented out

  11. Dear Gconnect,

    Thanks a lot for such wonderful article, this is really beneficial and the calculator is funtastic.

    Am working in a company located in Noida(NCR) and own a property located at Indirapuram (Ghaziabad).

    Am living in delhi with my family in an accomodation not owned by me.

    Please sugegst can i claim both

    a). Deduction on Homeloan interest towards property at indirapuram

    b). HRA towards rent paid to my mother for my accomodation in delhi.

    Please suggest how can i save maximum out of it ???

    1. Lokesh
      ya. You can deduct the loss on house property (which is the interest on Home loan less rental value), while you claim exemption for HRA which is calculated based on the rent paid by you.

  12. Dear Admin

    Thanks a lot for this valueble sugestion.

    Please also guide on


    is there any calculator or givernment guidlines available for the same ??

  13. Hi,

    if my property is to ve deemed rented , what shall be the minumum rental value i must declare.

  14. Dear Sir, Please help in this case – plot in Gurgaon in mother’s name-mrs. manjeet, construction cost Rs.25 lac , Housing loan rs 18 lac in Son name – sarabjeet singh , with mother – mrs manjeet as co applicant , now can the interest paid from the house property be exempt under Income tax act and be deducted from salary ( total taxable income )…house built in 2004 , and interest paid / EMI paid from there on , occupation certificate availed from HUDA in 2004…Also can i claim HRA if i m not staying in that property as work out of Delhi..

  15. Also help me with the Income Tax Act under the same query to be shown / told to my Learned Income tax officer at delhi .

  16. iam a govt employee,having availed home loan for my flat at hyderabad, lying vaccant, presently posted at delhi and staying in a rented accomodation.
    i submitted rent receipt for hra exemption for my rented accomodation at delhi and bank sttement for housing loan interest exemption u/s24. my office is telling that i can’t get both hra exemption and interest on housing loan deduction. kindly guide me with relavant rules to convince my administration.

  17. could you please guide me regarding the Income Tax return required for approval of a home loan…

    Say for eg:- on an income of 5 lakhs per annum, how much loan can i get… and is the whole income included or do they add or dedcut something… basically my question is would they include capital gains for computation of income

    thnx in advance

    1. computation of loan amount eligible based on one’s income is purely relative. It would differ with bank to bank. For example SBI calculates loan eligibility based on your monthly income after deducting all your family expenditure per month. If the EMI is Rs.20,000 for loan of Rs.20,00,000, then your monthly income should be considerably more than Rs.20,000 for getting the loan of Rs.20,00,000/-

  18. Is Water Tax paid to Municipality exempt from Rental Income or is it included in the 30% maintenance rebate

  19. Whether loss from House property can be set off against other head of income in the same year?. Return is to be filed yet.

  20. I was retired from service on 31.5.09. I had a house loan from a nationalised bank and on retirement, i.e. in the month of June 09 I had closed my loan account. The principal amount at the time of closing was more than Rs.2 lakhs. Kindly clarify whether I am eligible for Rs.1 lakh rebate which is normally allowed for GPF, LIC, etc.

    1. yes Housing loan principal amount Up to Rs.1,00,000 could be deducted under Section 80C. However, there will not be any room for other savings

  21. I have taken housing loan of 51.91 lakh for villa at Greater Noida ,last year interest was Rs.606302/-, and 140917/- as principal component ,rent received was Rs 60000/-,I stay in rented flat at vishakhapatanam and pay rent of Rs.18000/-pm.My basic pay is 58640/-(bp-49940+GP 8700), My EMI is 49799/- pm, total salary 1479330/-.
    Please explain my TAX LIABILITY to file return.

  22. sir i a in the grade pay of Rs 4200/ i am due for acp ie in jan 2011 pay is 18540/ in merged scale 5000-8000 what is my after get acp .

      1. sir ,recently the court given judgement on sc/st c promotion criteria wef 1997 is there any use for sc/st s .if such any change in fixations from 1/1/06.

  23. Sir,
    I have a self-occupied house. As such the annual rental value is Nil. House Tax is 1840 and Interest is 66292. So the total of house tax and interest on housing loan should be 68132, whereas the above calculator is showing only 67580. How come? Please clarify me immediatley whether the House Tax paid is fully exempt or not? If exempted, under which section or clause? My office is pressing hard for giving details of savings immediately otherwise they deduct tax from now onwards.

    Thank you Sir


    1. dear giridhar
      if self occupied the annual value is NIL.Thus you cannot claim municipal tax or the repairs etc. Only the interest element of Rs. 66292 is eligible if hose loan has been borrowed after 1/4/1999, as per Sec 24(2).

  24. sir, I am a central govt. employee and have self occupied house at the place of my employment(Visakhapatnam) bought(in 2001) after availing HBA from my employer(GOI).Another flat I acquired(in 2009) at Hyderabad after availing loan from Axis bank. Can I claim IT deduction on both the interests paid towards house loan ? what will be the limit for such deduction?

    1. This is the circular issued by Income tax for the year 2009-10 in respect of salaried class.

      It says
      “The deduction will also be allowable in respect of repayment
      of loans borrowed by an assessee from the Government,
      or any bank or Life Insurance Corporation, or National Housing
      Bank, or certain other categories of institutions engaged in the
      business of providing long term finance for construction or
      purchase of houses in India. Any repayment of loan borrowed from
      the employer will also be covered, if the employer happens to be a
      public company, or a public sector company, or a university
      established by law, or a college affiliated to such
      university, or a local authority, or a cooperative society, or
      an authority, or a board, or a corporation, or any other body
      established under a Central or State Act.”

      Based on this wordings there is no restriction about number of houses for which deduction of interest on house loans could be claimed. In your case the bank interest (no limit) on second house could be deducted. You may have to declare the rental value and include the same in your income

  25. I have built a house in my native place by availing HBA from my office (GOI) during the year 1999. The principle part is over and now interest on HBA is being deducted. During 2009, I have purchase a flat in Chennai through HDFC bank. My question is (a) whether I can get deuction of interest for both the houses and (b) in the Housing loan taken from HDFC, principle and interest are deducted. Can I show the principle amount recovered by HDFC under savings column i.e. upto Rs.1,00,000/-. Please advise me.

  26. Sir,
         This year our accounts section says no deduction of Interest part of Housing Loans will be given (for IT  exemption purpose) if it is taken for  HOUSE   EXTENSION/RENOVATION/MODIFICATION…it is not permissible as per IT Rules. Please guide is this objection correct..? I am living with family in it at work place (Lucknow)..and got house renovated & extended in 2005.

  27. i have a property not in the place of working , i have taken loan in contruction link plan in 2011 and property is under construction. total interest paid during 2011-12 is 43651/- for the year. how can i avail the interest on home loan u/s 24 and how much?

  28. Dear Admin.,

    A residential flat was alloted to me, by CGEWHO in December-2006, for which construction was completed slowly(which is beyond our control as the CGEWHO is an autonomous body under central government) in June 2012 only. Payment made by bank loan in instalments starting from December-2006, the recent instalment being in October 2010. The house is proposed to be let out, shortly. Please state whether the clause “completion of construction within three years” for availing tax concessions for interest on housing loan and under 80C is calculated from the date of first instalment or the date of final instalment borrowed from the bank. I shall be much thankful if you can give details of IT concession which we can avail in this condition.

    Thank You,

    M.C. Devarajan

  29. I have taken two housing loans. Both are let out.
    I am entering the details of loss on housing one as self occupied and one as let out. But my hr portal is not accepting and prompting that only “either self occupied or let out property”.
    If both are let out properties can I enter in let out property loss for both the houses. There is an option given in the let out property number of entries.

    I wanted to know how many let out properties can be accepted for exemption. Kindly clarify.

    1. There is no such restriction. As per IT Rules, exemption for interest paid can be claimed for one or more properties provided rental value of the those house properties are included as income

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