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Taxation benefits

14 June 2024

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.

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5 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (171414 Points)
Replied 14 June 2024

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.

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CA Anoop Kumar Sharma (Accounts Manager) (2038 Points)
Replied 14 June 2024

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.

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Khush Trivedi (3946 Points)
Replied 14 June 2024

Yes if you are taking loan from your friend you can claim the interest deduction under 24b after furnishing interest certificate but you won't get benifits of section 80C so kindly choose wisely

3 Like

CA Anoop Kumar Sharma (Accounts Manager) (2038 Points)
Replied 14 June 2024

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.