An overview of Income Tax Rules pertaining to properties is as under:

SECTION 24 (2)
Interest Deductions - The budget presented by the Finance Minister for the year 2001-2002, has increased the ceiling on the amount of deductions from Rs. 1,00,000 up to Rs.1,50,000 from an individual's income if it is self-occupied for the interest paid for a home loan.

SECTION 54 F
The income tax act gives a person who does not own a residential house a concession to purchase one when they sell a capital asset. If you sell a capital asset, normally, you are required to pay tax on the gain in the value of the asset after indexation of the cost. If however you do not own a residential house, you can reinvest the net consideration you received from the sale of the capital asset in a house property and not pay any income tax on the gain from the sale of the capital asset. There is however a time frame within which to reinvest the funds from the gain of the sale of the capital asset.

SECTION 54
Reinvestment of House Property - An individual or HUF reinvesting the net proceeds from the sale of a house in another residential house is exempted from Capital Gains Tax u/s 54, provided the new house is purchased within 2 years after or one year prior to the date of transaction.

SECTION 88
Repayment of the principal of a home loan up to Rs. 20,000 is eligible for deduction under Section 88 whereby 20% (i.e. Rs.4,000) can be deducted from the total amount of tax payable.