I want to construct a house for rental incomes.If I take a home loan from my friend,can I claim deduction under section 24 for interest payments to him?some people are saying that it is not possible to claim and some people are saying that 'Income tax act 1961' does not specify that this deduction will be available only if the loan is taken from specified banks.
Please let me know the correct information.
Yes, the interest paid on the home loan from friends or family can be claimed as a deduction under section 24 of the Income Tax Act, 1961.
Need to obtain interest certificate from the lender. The loan amount should be used for the purchase or construction of an HP.
N.B. Under New tax regime the deduction is not available for SOP.
The Income Tax Act of 1961 does not restrict this deduction to loans obtained solely from specified banks. Therefore, in my opinion, the interest paid on a home loan taken from friends or family can be claimed as a deduction under Section 24 of the Income Tax Act, 1961.
Please note that under the new tax regime, interest on a home loan for a self-occupied house is not allowed as a deduction. Additionally, under Section 24(b), interest for a let-out property can only be set off against income from house property. This means that any loss from house property cannot be set off against other income.
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