Both principal as well as interest of home loans attract tax benefits. With effect from 1st April 2005 (i.e. assessment year 2005-07) under section 80C of the Income Tax Act 1965:
Principal amount of repayment of loan along with other savings such as PF, PPF, Life Insurance premium etc up to a maximum of Rs 1,00,000/- will be eligible for deduction from gross income.
Interest paid on loan after completion of construction will be deductible from income from property
For self occupied - Income will be treated as nil and interest payment will be treated as minus income which will be adjusted against other income.
For rental property - It will be adjusted against rental income.
16 years ago
