FAQ on Housing Loan and Income tax benefit
Nov 17, 2009 Income Tax
Q-1 What are Income tax benefits of taking a housing loan under EMI Plan?
First Equated monthly instalment (EMI) amount is to be divided into the principal and interest components. The repayment of principal amount of the loan can be claimed as a deduction under section 80C up to a maximum amount of Rs.1 lakh. The repayment of the interest portion of the EMI is also allowed as a deduction under section 24 under the head “income from house property” upto Rs.1,50,000/- for self occupied property and full amount in case of let-out property.
Q-2 If I buy a house jointly with my wife and take a joint home loan, Can we both claim income tax deduction?
Ans:-Yes, if your wife is working and has a separate source of income, both of you can claim separate deductions in your income tax returns.The repayment of principal amount of the loan can be claimed as a deduction under section 80C up to a maximum amount of Rs.1 lakh individually by each co-owner.
In cases where the house is owned by more than one person and is also self-occupied by each co-owner, each co-owner shall be entitled to the deduction individually on account of interest on borrowed money up to a maximum amount of Rs. 1.5 lakh. If the house is given on rent, there is no restriction on this amount. Both co-owners can claim deductions in the ratio of ownership.
Q-3 My husband and I have jointly taken a home loan. He pays 75 percent of the EMI. What will be our individual tax benefits?
Ans: – As you have taken a joint home loan, both of you are eligible for tax exemption for your share of the EMI paid. For claiming income tax deduction, the EMI amount is divided into the principal and interest components. The repayment of the principal amount of loan is claimed as a deduction under section 80C of the Income Tax Act up to a maximum amount of Rs. 1lakh individually by each co-owner. The repayment of the interest portion of the EMI is also allowed as a deduction under section 24 of the Act, which is given under the head “income from house property”. In case you are living in the house for which home loan is taken, both of you shall be entitled to deduction in the ratio (3:1) on account of interest on borrowed money up to a maximum of Rs. 1.5 lakh individually. If the house is given on rent, there is no restriction on this amount and both co-owners can claim deduction in the ratio of ownership- 3:1 in your case.
Q- I plan to buy a house by raising loans from friends and relatives. Will I be eligible for tax benefit from all sources?
Ans: – Interest payment to friends and relatives can be claimed u/s 24 but only against a certificate received from them. In the absence of the certificate, you would not be eligible for the deduction. The recipient of interest income who issues the certificate is liable to pay tax on the interest income that he receives. As far as the principal payments are concerned, they would not qualify for tax benefit as loans only from notified institutions and banks are eligible for such deductions.
Tags: Home Loan, Housing Loan, income tax act, income tax benefits, income tax deduction, interest portion, principal and interest, restriction, section 24, Tax Exemption
November 17th, 2009 at 4:16 am
I have purchased a home on name of my wife and have taken loan on my name. Can i take Income Tax Deduction ?
November 18th, 2009 at 12:42 am
No. The same will not be allowed to you.
December 8th, 2009 at 10:25 am
Dear Sir
Is it possible that I claim the Interest part on the loan and my wife claims the Principal Part of the Loan,while filing her return.
The loan is wholly paid by me and my wife is a co-applicant.
Thanks for your kind response.
regards
Santosh Shirsat
December 30th, 2009 at 4:39 pm
i have taken a sbi housing loan Rs 3,00000, my emi 4000, any income tax benifit if any ?
December 31st, 2009 at 1:27 am
Yes. Put of Total Payment interest component will qualify for deduction from Income from House Property. Principal loan payment will qualify for deduction u/s. 80C. You will also get deduction in respect of stamp and Registration charges paid u/s. 80C.
January 6th, 2010 at 12:58 pm
I am planning to buy a house property which I would like to register in the name of my wife and my mother. The loan application will be jointly by me, my mother, my father and my wife.
The EMIs to the lender will be paid out from my sole bank account and will later be replenished 33.33% each from my mother and my father. The total interest payment in a year is likely to be more than Rs 4.5 Lacs.
Question 1: In the above situation, can all three of us claim Rs 1.5 Lacs each under section 24?
Question 2: Is it mandatory to also be a co-owner of the property to claim the deduction u/s 24 or is it sufficient to only be co-applicants in the loan?
January 7th, 2010 at 2:52 am
Benefit of interest on housing loan can be claimed only by those who are the owner of house property. Loan should be in there name too and they should make payment from there bank account.
In You can since Loan is in the name of your wife and mother so they only can claim interest benefit.
instead of paying loan from your account you should transfer the amount to there account and from there EMI can paid by your wife and mother proportionately.
January 22nd, 2010 at 2:58 pm
Hi, I have taken a hosuing loan in 2008 but i got the house competed only in 2009. How to claim benifit the internet and capital paid during the 2008-2009 fin year
January 22nd, 2010 at 9:38 pm
Interest Prior to construction will be eligible for deduction in next 5 years equally and Interest post construction will be eligible to deduction in the year of payment but both interest will be subject to overall limit of Rs. 1,50,000/-.
Payment towards principal will qualify for deduction U/s. 80C up to the maximum of Rs. 1,00,000/-.
January 31st, 2010 at 7:18 pm
My question is that My father & myself have booked a Flat–which is under construction.
I am the joint owner of property(2nd name is mine).
Can I pay 100000/- of the principal amount and claim as deduction u/s 80 C?