The Union budget 2017 has severely curbed the tax benefit on the interest paid on housing loans in case of properties that are rented out or are 'deemed let-out'. The budget proposes to restrict the loss on house property that can be deducted from 'other heads of income' such as 'salary income' to Rs 2 lakh only, says EY. After these deductions, often the rental income becomes zero or negative and is called 'loss from house property' in the latter case. Such loss is currently allowed to be set off against other heads of income such as salary without any limit. This move would limit the amount of interest a person pays on his home loan that he can claim as a set off (in case of 'rented/deemed to be rented' house) thereby effectively reducing the tax benefit he gets from interest paid on home loan.

Source: Economic Times February 01, 2017 10:41 UTC