Section 24 of the Income Tax Act, 1961, allows taxpayers to claim deductions on income from house property, specifically for interest paid on home loans and a standard maintenance deduction. It provides a 30% standard deduction on net annual value and up to ₹2 lakh for interest on self-occupied property loans.
Section 24 of the Income Tax Act lets homeowners claim a deduction of up to Rs. 2 lakhs (Rs. 1,50,000 if you are filing returns for last financial year) on their home loan interest if the owner or his family reside in the house property.
Section 24 provides deductions against rental income from house property, including 30% standard deduction on rent and deduction on interest paid on home loans.
Tax Benefits under Section 24
Homeowners can claim a deduction on their home loan interest on self occupied property under Section 24 of the Income Tax Act. The deduction amount is up to Rs. 2 lakhs (or Rs. 1,50,000 for the previous financial year) if the owner or their family occupies the house property.
26 U.S. Code § 24 - Child tax credit. There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each qualifying child of the taxpayer for which the taxpayer is allowed a deduction under section 151 an amount equal to $1,000.
Landlords can limit the impact of Section 24 by transferring the ownership of their rental property to a limited company. This means they'd pay corporation tax instead of income tax, so they wouldn't be affected by Section 24.
Section 24 of the Income Tax Act allows deductions on home loan interest, reducing tax liability. However, the new tax regime removes this benefit, impacting homeowners. Taxpayers must compare both regimes to make informed financial decisions.
Under Section 24, landlords can no longer deduct mortgage interest directly from their rental income. Instead, they receive a 20% tax credit on their interest payments, regardless of their tax bracket.
To declare your home loan, enter the interest paid under “Income from House Property” for Section 24(b) deductions, and principal repaid under “Deductions” for Section 80C in your ITR form. Attach supporting documents like interest and principal certificates.
Common Mistakes While Claiming Section 24B
Filing a claim on loans from unapproved sources can lead to disallowance during assessment and may attract notices from the Income Tax Department. Another common error occurs when reporting interest without the proper certificates from banks or lenders.
Under Section 24(b) of the Income Tax Act, you can claim a deduction of up to Rs. 2 lakh per year on the interest paid on your home loan for a self-occupied property. This benefit applies to both the old and new tax regimes. For the new tax regime: The standard deduction for home loan interest is available.
Home mortgage deduction limit
The mortgage interest deduction limit is $750,000, or $375,000 if you're married filing separately. This means you can deduct mortgage interest on the first $750,000 or $375,000 of debt, respectively. As such, many homeowners are able to deduct 100% of their mortgage interest.
But what is it, and how does it work? Section 24 removes a landlord's right to deduct finance costs, including mortgage interest and arrangement fees, from their rental income before calculating their profit from rental income. The landlord can then claim back a tax credit equivalent to 20% of annual mortgage interest.
No, mortgage interest isn't always 100% deductible; it's subject to limits and conditions, primarily that the loan must be for buying, building, or improving your main or second home, and you must itemize deductions, with current limits at $750,000 of debt ($375k if married filing separately) for loans after December 15, 2017, while older loans have a $1 million limit, and you can only deduct the interest portion, not principal.
Deductions Under Section 24
The deduction will be granted if the homeowner pays and bears the municipal tax for the entire fiscal year. Standard Deductions: This section sets the standard deduction for income tax purposes at 30% of Net Annual Value. The self-occupied residence is not subject to this deduction, though.
Calculate your total tax: Add together your tax liability from Line 16 and any additional taxes from Line 23. Enter this final tax amount on Line 24. Enter payments and withholdings: If you had tax withheld from wages, pensions or other income sources, enter these amounts on Line 25 (federal tax withheld).
The penalty for late filing of ITR is Rs. 1,000 for income up to Rs. 5 lakhs and Rs. 5,000 for higher incomes, plus 1% monthly interest on unpaid tax.
Mortgage Interest Deductions
Your mortgage lender will provide you with an IRS Form 1098 at the end of each year that itemizes how much you paid in interest on your loan. You can deduct that amount from your taxable income in many cases.
To claim a home loan interest deduction under Section 24(b) in ITR, select the appropriate form (ITR-1 or ITR-2), navigate to the "Income from House Property" section, enter the total interest paid, and submit supporting documents like loan statements.
For 2025, you can generally deduct mortgage interest on up to $750,000 of home acquisition debt ($375,000 if married filing separately), but a higher limit of $1 million ($500,000 MFS) applies to mortgages taken out before December 16, 2017, and you must itemize deductions to claim it. Interest on home equity loans is only deductible if the funds were used to buy, build, or substantially improve your home.
Incorrect Loan Purpose: Deductions under Section 24 apply only to loans taken for the purchase, construction, repair, renewal, or reconstruction of a property. Interest on personal loans or loans for land purchase without construction does not qualify.
As per section 24(b), you can claim a maximum deduction of ₹2 lakh on the interest paid. Therefore, in this case, you can avail of the maximum deduction and reduce your taxable income by ₹2 lakh. By utilising this deduction effectively, you can save on your tax liability and make homeownership more affordable.
For the 2025 tax year, the standard deductions are: $15,750 for Single/Married Filing Separately, $31,500 for Married Filing Jointly/Qualifying Surviving Spouse, and $23,625 for Head of Household, with additional amounts available for seniors (65+) and the blind, plus new rules for SALT deductions, per the One Big Beautiful Bill (OBBB).