Home loan borrowers, who have let out their property, can claim any amount paid as interest as a deduction under Section 24(B) of the Income Tax Act 1961, according to a tax expert.

It is generally known that up to Rs 2 lakh paid as home loan interest can be claimed as a deduction. However, this limit applies only in the case of a self-occupied property and is subject to certain conditions. If the borrower has let out his/her property, the limit of Rs 2 lakh would not apply.

According to Dr Suresh Surana, Founder of RSM India, the home loan interest deduction limit doesn’t apply if the property has been let out. The taxpayer, in this case, can claim the entire interest as a tax deduction.

“With respect to any repayment of home loan (along with interest), the taxpayer may claim home loan interest u/s 24(b) of the Income Tax Act. It is pertinent to note that such interest is restricted to Rs. 2,00,000 (depending upon various conditions in the case of a self-occupied property). However, the home loan interest deduction limit would not apply if the said property is a let-out property and the taxpayer may claim the entire interest as tax deduction u/s 24(b) of the Income Tax Act,” Dr Surana told FE Money.

Also Read: Rental income up to Rs 10 lakh can be tax-free under New Tax Regime; here’s how

Moreover, according to Dr Surana, the principal component of the home loan as well as the stamp duty value in connection with the purchase of the new property can be claimed as a deduction under Section 80C (cumulative limit for specified deduction) of the Income Tax Act up to Rs 1,50,000.

For those who can afford to buy a house, rental income can be a lucrative way to earn passive income along with a regular income from a regular job or profession (Read: ways to make the most of rental income).

Any rental income received by a taxpayer is taxed under income from house property. Taxpayers can have a maximum of two self-occupied properties for which they can take the benefit of nil annual value. This benefit doesn’t apply if the property has been rented out. (Read: how rental income is taxed for salaried).

A separate deduction is available against rental income from house property. This makes rental income up to Rs 10 lakh tax-free under the New Tax Regime for those who do not have any other income.

Disclaimer: The views and suggestions mentioned here are those of the respective commentators. The facts and opinions expressed here do not reflect the views of www.financialexpress.com. Please consult your tax advisor for any income tax-related queries)