Eligible House Property

An Eligible House Property refers to a residential or commercial property that qualifies for income tax benefits under the Income Tax Act when it is used to earn income or is under loan repayment for acquisition/construction.

Eligibility is usually determined for the purpose of:

• Claiming deduction on home loan interest (Section 24(b))

• Claiming deduction on principal repayment under Section 80C

 Criteria for a House Property to be Eligible

1. Ownership: The taxpayer should own the property (solely or jointly).

2. Purpose: Property can be:

   • Self-occupied

   • Let out (rented)

   • Deemed to be let out (if not self-occupied but not rented)

3. Loan-Related: If deductions are claimed for home loan:

   • Loan must be taken for purchase, construction, repair, renewal, or reconstruction.

   • Interest/principal repayment must be documented.

4. Completion: For new construction, completion or occupation certificate is generally required.

5. Time Limit for Loan Deduction: Interest on home loan for self-occupied property is allowed for a maximum of ₹2 lakh per year (Section 24).

 Examples

1. Self-Occupied Property:

   • Raj owns a house he lives in and has a home loan.

   • Interest on this loan (up to ₹2 lakh/year) can be claimed as a deduction.

2. Let-Out Property:

   • Priya owns a flat she rents out.

   • Entire interest paid on the home loan can be claimed against rental income under Income from House Property.