While purchasing a house, one is often told that tax benefits would be available under two sections - Section 80C (up to Rs. 1lakh) for principal payment and Section 24 (up to Rs.1.5 lakh) for interest payment. Under Section 80C, there is an additional benefit. One could also claim the amount paid as stamp duty and for registration of the property in the year of purchase. However, if you do, there are several conditions attached.

Sale of property:

Most individuals only consider the capital gains tax they will have to pay in case of selling their property. However, those claiming deductions on the principal amount under section 80C cannot sell the house for the next five years. If it is sold, the total amount of savings through such rebates will be considered as one's income in the year of sale and taxed accordingly. The relief under Section 24 is not linked to the sale of property. One does not have to pay for the benefits received under it.

Under-construction property:

Purchasing an under-construction property through a home loan is a common practice. However, unless one gets possession and till the certificate of ownership is presented, no rebate can be sought under either of the sections. The total interest amount paid until possession can be claimed in five equal instalments over the next five years after the end of the financial year when one received possession.

Second property:

If you own two properties and took loans for both, the benefits under Section 80C will still be the same. So, you will have to club claims from both properties. However, under Section 24, besides the usual rebate of Rs.1.5 lakh for the first self-occupied property, one can claim the entire interest amount for the second home as deduction. The best part - there is no limit on the benefit for interest payment in case of a second home.

Loans from other sources:

While claims on the principal amount under Section 80C can be made, the loan has to come from a bank or an institution. In case one has borrowed from friends or relatives, there will be no benefits. However, Section 24 will let you claim a rebate of Rs.1.5 lakh even on loans taken from friends and relatives, as long as the property is for self-occupation. "However, the tax payer needs to retain a certificate from the friend or relative to whom he is paying the interest. Not being able to substantiate the source of funds for the purchase could see him getting a scrutiny letter from the I-T authorities," says Homi Mistry, partner, Deloitte Haskins & Sells.

Loans for renovation:

There will be no rebates for a loan taken for repair or renovation of self-occupied properties under Section 80C. There is a limited benefit of Rs. 30,000 under Section 24. Rebates will be considered income if the property is sold in less than five years. As long as the property is for self-occupation, Section 24 will let you claim a rebate even on loans taken from friends and relatives