In respect of Loan taken for Purchase/Construction of a Residential Unit, the borrower can avail benefit of payment of interest as well as repayment of principal.
Interest on housing loan can be claimed as a deduction from income from property, salary, business/ profession, capital gains, or any other source upto a maximum of Rs. 1,50.000 under section 24(b) of the Income-tax Act, 1961 every year subject to fulfilment of the following conditions.
If any of the first 2 Conditions mentioned above is not satisfied, i.e., loan was taken before 1st April 1999 &/or loan is for repairs/renovation/reconstruction, deduction of only upto a maximum of Rs. 30000 every year can be claimed.
In case the Loan is for repairs/renovation/reconstruction, deduction on account of interest on that loan can be claimed only if the property is self-occupied or if the owner is not able to occupy the property only because of his employment/business/profession at another place, where he/she resides in a building not owned by him/her or his/her spouse/close blood relatives.
The deductions are permissible only in respect of one property of the borrower, i.e., if he/she has raised loans for multiple properties, interest can be claimed as a deduction only in respect of one property, depending upon the borrower's choice.
As regards principal repayment, it can be claimed as a deduction from the gross total Income only by an Individual/HUF borrower under section 80C of the Income Tax Act, 1961.