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What are the tax exemptions for purchasing new and old home in India?

Updated: Apr 1


Income Tax Rules' emphasizes the need of tax knowledge for Indian homebuyers.
Understanding Income Tax Rules: A crucial aspect to consider when buying homes in India, whether you're a first-time buyer or an experienced trader.


In India, one of the most important things to remember when looking for homes is the current income tax rules. This is true whether you're a first-time buyer or an experienced trader. The things that these terms don't cover could have a big effect on how you plan your finances. On a broad level, these are the rules and the people who can use them:


1. Part 24(b): Interest on home loans

The interest paid on house loans for a self-occupied property may be deducted up to ₹2 lakh (₹3.5 lakh for senior persons) under Section 24(b). This works for homes that are a few years old or more.

An unlimited amount of interest may be deducted from the sale or rental of a property that is not used for one's own residence.


2. Section 54: Homeowners' Capital Gains Exclusion

If you buy another home with the money you get from selling an older or newer home, you won't have to pay capital gains tax on that sale, according to Section 54. You have the option to build the new property within three years after the sale or buy it within one or two years before or after the sale.

No taxes will be due on the portion of the capital gains that went towards buying the new house.


3. Exclusion from Capital Gains on Sale of Any Asset (Except House Property) (Section 54F)

You are eligible for an exemption under Section 54F if you utilize the money from the sale of any asset other than a house to buy a home, whether it's new or old. This exception is subject to the same requirements as Section 54.


4. Additional Deduction for Home Loan Interest Under Section 80EEA

Home loan interest for affordable housing might be further deductible up to ₹1.5 lakh under this provision. This deduction may be used in excess of the ₹2 lakh maximum set forth in Section 24(b).


Who Is Able to Take Advantage?


1. Section 24(b): Home Loan Interest

  • People who own a house and have taken out a mortgage to finance it.

  • Useful for both contemporary and historic homes.

  • Classifies homes as either leased out or inhabited by the owner.

2. Section 54: Homeowners' Capital Gains Exclusion-

  • People who have sold a house, whether it's new or old.

  • The money has to go towards buying another house.

  • Certain time periods are required for the acquisition of property.

3. Section 54F: Exclusion from Capital Gains on the Sale of Any Asset-

  • People selling any kind of asset (apart from real estate).

  • A home, new or old, should be purchased using the money from the sale.

4. Additional Deduction for Home Loan Interest under Section 80EEA

  • Presented for people.

  • Crafted with low-income homeowners in mind.

  • Allows for a further deduction for mortgage interest.


Disclaimer: The information supplied is not professional advise. Always seek personalized advice from certified specialists. We cannot guarantee the correctness, completeness, or reliability of any material. Use of such information is at your own risk.



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