Dec 7 2008

Home Loans and Income Tax benefits

Posted by krishnas in Banking, Home Loans, Income Tax, Indian Economy, Interest Rates, Real Estate
157 Comment

Home Loans and Income Tax

Introduction

In this article I am writing about the Home Loans and how to get the maximum benefits on Tax Savings. If you are not aware, Home Loans are the best source for Tax Savings plan. You cannot use Car Loans, Personal Loans or any other loans for the Tax Savings plan. But, still many people not aware of how to utilize the potential of use this plan. We will look into this article on rules and regulations you must know before planing the Home Loans and getting the Tax Benefits. Please post your feedback on the comments section. I would be happy to answer all your questions. You can subscribe to our future articles here.

Tax Limitation on Home Loans

Income Tax act 1961, provides two section where you can use home loans for the Tax Savings purpose. The two sections are :

Section 80c

Under this section maximum of Rs.100000(one lac) can be exempted from the Income Tax on repayment of principal on home loans.

Example 1

If your Taxable Income is Rs.500000 and your yearly home loans principal repayment is Rs.80000, then your Taxable Income is Rs.500000 – Rs.80000 = Rs.420000.

Example 2

If your Taxable Income is Rs.500000 and your yearly home loans principal repayment is Rs.100000, then your Taxable Income is Rs.500000 – Rs.100000 = Rs.400000.

Example 3

If your Taxable Income is Rs.500000 and your yearly home loans principal repayment is Rs.140000, then your Taxable Income is Rs.500000 – Rs.100000 = Rs.400000. Because you can exempt maximum of one lac under this section.

Other savings

Note that under this section (80c) you can show other savings like Public Provident Fund (PPF), etc. Maximum limit Rs.100000 includes all the savings. If you are declaring Rs.100000 as the principal payment, then you can not include other savings.

Section 24b

Under this section maximum of Rs.150000(1.5 lac) can be declared as the interest payable on the Home Loans. As we have shown the examples, here as well the rule is same. You can exempt maximum of Rs.150000.

Points to Consider while computing Income Tax on Home Loans

Income Tax exemption can be sought only once the construction is complete. You can seek Tax Benefits only from the financial year in which the construction is complete. There will be no deduction for the year in which the construction is still on as at the end of the year.

Income Tax Policies on Principal Repayment

Principal Repayment can be considered as a valid investment under section 80C only if it is made for a self occupied house. That is, you should be living in the house for which you are making the Principal Repayment.
If the house is not in the city in which you are working – in which case you can claim the principal repayment as an investment under sec 80C even if the house is not self occupied. For example, if you are working in Bangalore and have one house in Chennai for that you are paying the EMI, you can claim the Tax Benefits on the Principal Repayment even if the Chennai house is rented out.
If you have taken the home loan in joint name, the Tax Benefit (for both Principal Repayment and Interest Paid) would be available to both of you if the house is also in joint name.

Income Tax Policies on Interest Repayment

The interest payable for the pre-acquisition or pre-construction period would be deductible in five equal annual installments commencing from the year in which the house has been acquired or constructed.
The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction of house property is eligible for deduction under section 24(b).
In case the property is rented out even for a part of the year, there shall be no limit on this, and entire interest on Housing Loan is deductible under section 24(b).
The best part is that there is no restriction of “Self Occupied Property” for claiming the tax break on interest paid under sec 24. In fact, if you have rented out the house, and the rent you receive is more than Rs. 1.5 lacs per year, ALL interest paid (even if it is more than Rs. 1.5 lacs) is deductible from the rent received – provided that the interest paid is not more than the rent received.
If you are paying the EMI for 3 houses, you can claim interest paid for all the 3 houses under Sec 24 as long as it doesn’t exceed Rs. 1.5 lacs.

Few Examples would help to understand

Kamalan bought a house in Bangalore and staying that house. He got the loan amount of Rs.1000000 for that house. He is also working in the Bangalore city. His yearly Principal Repayment is Rs.100000 and Interest Repayment is Rs.40000.

He can save total of Rs.140000(Rs.100000 + Rs.40000) since he is occupied that house and also staying in the same city.

Later he bought another house in the Chennai and took another Home Loan of Rs.1200000. He then started paying the EMI for that loan amount. He opted to rent out that house. His Principal Repayment is Rs.110000 and interest payable is Rs.50000 per anum.

He is eligible to show the Principle Repayment under the Tax Savings. Please note that the maximum amount he can show as the Principal Repayment is Rs.100000. In this case even if the rule permits him, he already repaying the principal of Rs.100000 for the Bangalore house. So, he already reaching the maximum limit.

But, in the case of rent payable, there is no limit on Tax Savings. It is because he rented out the house. This rules under section 24b. When you are applying for Home Loans and proposing that the house will be given for rent, you will be eligible for no limit on interest payable under Tax Savings.

Some of the terms used in the Home Loans:

EMI: Equated Monthly Installment till the loan is paid back. It consists of a portion of interest and the principal
Floating Rate of Interest: Rate of Interest which varies with the market lending rate. This means that there is an element of risk of paying more than budgeted amount in case the lending rates goes up
Monthly Reducing Balance: In this system interest reduces monthly with repayment of Principal amount
Annual Reducing Balance: In this system principal is reduced annually at the end of the year so you end up paying interest even for the portion of principal you have actually paid back
Fixed Rate of Interest: Rate of Interest remains unchanged throughout the period of the loan
Processing Charge: It’s a fee payable to the lender on applying for the loan
Prepayment Penalties: When loan is paid back before the agreed term of the loan, then banks/ institutions charge penalty for the prepayment
Commitment Fee: Some institution charge commitment fee in case the loan is not availed within a stipulated period, after it is processed and sanctioned
Miscellaneous Cost: It is quite possible that some lenders may charge documentation or consultant charges .

Use our consulting service for Home Loans (JUST Rs.250)

Summary

Update : Home Loans and Income Tax Benefits – Part 2

The above write up is very comprehensive on Home Loans and Tax Savings. The facts are taken from many sites and I used different resources to check the accuracy. This post will be very useful for the people who want to invest on properties and get the Benefits of Income Tax. I might have missed few points and I will update the post if I come across. You can post it in the comments if there is any mistakes. You can subscribe to our RSS feeds.

If you have any queries on Home Loans and Tax Savings, please drop a comment with your mail id, I will contact you with the details.

TAGS: Home Loans, home loans and emi, housing loans, Income Tax, income tax act, Indian Economy, Interest Rates, property tax, section 24, section 24b, section 80, section 80c, tax savings, tax savings on home loans

157 Comments on this post

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December 2nd, 2009 at 7:10 pm

Vijay said:

Hi,

Just want to confirm, in case of a salaried employee who has paid Rs.1.5 lakhs towards Interest and another 1 lakh for Pre-EMI during the current year, the total amount he can claim is 1.5 interest portion + 1/5th of 1 lakh, Rs.20,000/- total 1.7 lakhs for the AY 2009-10.

Please let me know if my understanding is correct or not.

Thanks in Advance
Vijay

February 15th, 2009 at 12:17 am
R.K.Bakshi said:

I am having SOP for which i have taken a loan of Rs.7.00 lakhs in 2001 and annual interest is Rs.65000/-. I have taken a second loan of Rs.5.50 lakhs and the property purchased is let out. Annual interest on second housing loan is approx Rs.50000/-. I am claiming interest exemption on SOP property only of Rs.65000/-. Rental income of second house property is equivalent to interest on borrowed capital.
Query :- Whether i am eligible to claim interest exemption of Rs.65000/- +Rs.50000/-=Rs.1,15,000/- against permissible limit of Rs.01.50 lakhs as admissible.
Presently up till now I have not claimed yet.

February 16th, 2009 at 9:06 pm
Surbhi said:

homeloan applied for 25 lacs, sanctioned amount is 20 lacs.
For difference amount we took personal loan from bank. Can we claim interest and principal amount paid for ths personal loan as its purpose was acquisition of home / furniture?

March 8th, 2009 at 11:00 pm
krishnas said:

@Surbhi,

HI,

You cannot claim any tax benefit for the personal loans.There is no way to claim as the purpose for acquisition of home / furniture. In that case you should have taken the loan for home improvement. That can be sanctioned only for the existing home properties. I hope this clears your doubt. if you have doubts please reply to this comment.

March 8th, 2009 at 11:12 pm
krishnas said:

@Vijay,

Yes.. you will be eligible to show the 1.7 lacs for the deduction. And also the amount you have paid during the pre-EMI period will be deducted from the tax in the 5 subsequent years. That means from the date year when the construction is completed.

if you paid any principal amount while the construction is not completed, you cannot claim that amount for ever. All these provisions coming under the section 24.

March 9th, 2009 at 12:45 am
Kishore said:

Request clarification on the rule for exemption of Interest on Housing Loan:
I have a property in Bangalore , which is self-occupied and I am claiming exemption under Section 24b for the interest on housing loan of Rs.94,500/-

I have another house in Chennai, which is rented out and I have decelared the income received from this house. I have acquired a home improvement loan for this property and I have paid interest of Rs.83,800/- on this loan.

Can I claim a total deduction of the second interest of Rs.83,800/- out of the net income from property (Rental Income – House Taxes paid – 30% of the rental income)? I presume the limit of Rs.1,50,000/ for Interest on housing loan does not apply in this case. Or, is there a rule that interest on both loans put together should not exceed 1.5 Lacs, i.e., though the total interest is 94,500 + 83,800 = 1,78,300, should I claim only 1.5 Lacs as exmption?

Does the interest on loan for the second point, where I am showing rental income also come under Sec 24b, or is it some other section?

A further point in question is
Rental Income – House Taxes paid – 30% of the rental income amounts to Rs.82,000/- whereas
The interest on housing loan for this house is Rs.83,800/-
Since the interest exceeds the net rental value, am I allowed full exemption of the interest?

Look forward to your clarification. Thanking you,

March 18th, 2009 at 8:36 pm
krishnas said:

HI Kishore,

Thank you for the query.

For the rented property there is no limit on the interest paid. In your case you can exempt the whole Rs.83800 in the tax deduction. Keep in mind that when you are getting income from the rent, deduct this from your total tax amount Rs.83800 – rental income = will be eligible for the tax deduction.

In case if you are staying the house which you have applied for the home improvement loan, then you are eligible for the Rs.30000 and it is part of the Rs.150000 maximum limit.

Hope this clears your doubt. You have further questions, please reply to this comment.

March 18th, 2009 at 9:15 pm
Meha said:

I am planning to take a loan of 25lacs, i know i am eligible as per my gross pay. I want to know if i can claim tax benifits for both HRA and the home loan since i will get the possession of my home only after three years. Also how much of tax benifit can i get for 25lacs which i have taken for a period of 20yrs.

March 23rd, 2009 at 4:37 am
krishnas said:

HI Maha,

You can claim the tax benefit only when started occupying the house. For example, you said you will occupy only after three years. In that period you cannot claim the tax benefit.

If you are staying in the own house, then you are not eligible to apply for the HRA benefits.

You will be eligible to claim Rs.100000 as the principal repayment and Rs.150000 as the interest payment. (Only when you are staying in the house). If you occupy the house after three years, then the total interest paid during that year can be claimed in 5 equal installments in the subsequent years.

Is it cleared your doubts? If you have any doubts please reply to this comment.

You can read many useful tips related to the home loans here:
http://www.thinkplaninvest.com/category/banking/home-loans/

March 23rd, 2009 at 4:48 am
Sunil said:

We are interested to purchase second house and give for rent , if we take rent Rs 96000 / annum and my interest to pay housing loan is Rs 2.6 Lacs . How much ammount we can get interest subsidi.

March 23rd, 2009 at 5:18 am
Regi said:

hi

I am from kerala and salaried.

if i take a improvement loan for my own house (which is in the name of myself, my mother and my father).. can i, Claim full home loan tax benefit of Rs. 1.5 lacs .

My parents will not claim the tax benefit as i am doing the same.

pls advice.

regi

March 23rd, 2009 at 6:32 am
krishnas said:

@Sunil,

You can claim the tax benefit of Rs.164000 (260000-96000). This is not subsidi . From your total taxable income you can deduct 164000 and pay the tax for remaining amount.

March 23rd, 2009 at 7:52 pm
krishnas said:

@Sunil,

I have written a detailed article on home improvement loans and the tax benefits on home improvement loans. The article is here:
http://www.thinkplaninvest.com/2009/03/tax-benefits-on-home-improvement-loans/

In your case, If you are only person repaying the loan, you can claim the entire tax benefit for yourself (provided you are an owner or co-owner).

March 23rd, 2009 at 7:59 pm
Regi said:

hi

thanks for the input on the income tax benefit on the improvement loan aspect. also pls clarify..

If i take a loan of 7 lakhs and pay a EMI of 9k per month. the total repayment will be approx. 1 lakh. of this say the int. amount is 90 and principal is 10 k.. So can i avail the entire 90k as the income tax benefit or 1 lakh as benefit.

Or is there a Cap on the amount to be claimed for exemption under improvement loan.

Thanks
Regi

March 24th, 2009 at 12:03 am
krishnas said:

HI Regi,

No deduction is available for the principal portion of the repayment on home improvement loans. And, if you are staying the house which you applied for the home improvement loans, then you are eligible to claim Rs.30000 as the maximum. If the property is rented out, there is no limit on the tax deduction on the interest payment( http://www.thinkplaninvest.com/2009/03/tax-benefits-on-home-improvement-loans/ ).

I hope this clears your doubt.

March 24th, 2009 at 1:16 am
Gaurav said:

I have 2 related queries
I wanted to know how many times a person can avail benefits from Home loan in the whole lifetime

And how many home loans at a given point of time

Thanks in advance
Gaurav

March 31st, 2009 at 5:26 am
krishnas said:

HI Gaurav,

No restrictions for life time and at a given point of time. Tax benefits will be same per individual even on one home loan or multiple home loans.

I hope this clears your doubts.

Thanks,
Krishna

March 31st, 2009 at 8:31 am
SANDEEP said:

Is this deduction on second home loan can be claimed at source? I mean can it be used while computing income by company or it has to be claimed latter from the Income tax dept?
kolgesandeep@yahoo.com

April 8th, 2009 at 1:05 am
krishnas said:

HI Sandeep,

It involves many computations. But, it is nothing to do directly with the income tax department. The same way how you are doing for the first home loans, you will have to calculate for the second home loans.
If you have more doubts please read this article, this case some info on second home loans:
http://www.thinkplaninvest.com/2009/04/home-loans-and-income-tax-benefits-part-2-2/

You can reply to this comment if you are still not clear.

Thanks,
Krishna

April 8th, 2009 at 1:15 am
SANDEEP said:

Hi,
Thanks for quick reply.
I wanted to know actually whether accounts manager of my company can consider this second loan and compute my monthly salary based on that. For first home loan he is already using 24 and 80C for computing income and passing on benefit every month.
In case of second home loan, can he do the same based on information provided by me or do I have to claim this amount latter whiling filing returns?

Thanks and Best Regards,
Sandeep

April 8th, 2009 at 1:22 am
krishnas said:

Yes..you can show the second home loan into your company. Here I have doubt whether you have rented out any of the house?. Because you are not allowed directly tax exemption for the two houses except in any special case. If you rented out any of the house, you will have the unlimited tax exemption on interest paid for the rented property. That means balance the rent income with home loans interest payment, the remaining amount can claim the tax benefits. I think it has to discussed with your companies account manager.

Thanks,
Krishna

April 8th, 2009 at 1:30 am
Rohit said:

Hi,
Your answers are very useful first of all. My query is related to some above but not exactly.
Suppose me and my wife take a joint loan and also take the property in the joint name, the first question is there any affidavit to be submitted while filing IT returns on the sare %age of the property?
Second question is related to the calculation.
If we rent this house and get 1 lac as rent/ annum- less 30% maint will give a total rental income of 70k.
Now we are giving 3 lac as a interest/year on this so will my taxable income come down by 70,000 – 300000 = 2.3 lacs? assuming i am claiming the entire tax benefit? Considering that there is no upper limit of the interest paid for rented out property is the benefit only restricted to the rental value or it can go negative as well?

April 10th, 2009 at 4:48 am
Sudhir said:

The query is that I got the poccession on 26 March 2009. Now am I eligible to take the tax benefit for the FY2008-09 since I got poccession in FY 2008-09.

April 30th, 2009 at 4:35 am
krishnas said:

HI Sudhir,

Since the actual date of completion is 26th March 2009, you will get tax benefits for the financial year April 2008 to March 2009.

Thanks,
Krishna

April 30th, 2009 at 8:32 am
sriram said:

Dear sir, I have a question regarding total interest exemption available for a single house in case of joint ownership. The house is jointly in my wife’s and my name. The total interest paid this FY will be 4 Lakhs. Can both of us claim 1.5 Lakhs exemption. So that the total exemption will become 3 Lakhs. Is the above true?

May 3rd, 2009 at 12:01 am
krishnas said:

HI Sriram,

Yes..you both can claim the 1.5 lacs each. Make sure that you both are co-applicant in the house loan.

Thanks,
Krishna

May 4th, 2009 at 5:55 pm
Chandu said:

Hello sir,

As normally we can invest 100,000 INR for tax Benifit in Insurance, NSC, PPF etc.

This 100,000 is including Housing loan Principle ammount or we can get benifit of both (Means 100,000 investment + 100,000 Housing Loan Principle )

Regards,
Chandu

May 29th, 2009 at 2:13 am
RK said:

Hi Krishnas,

I bought a house which has two portions. I am planning to live in one portion and rent out the other portion. I have a home loan of 30 Lakhs against the property and paying 3 Lakhs as EMI every year in which approx. Rs. 2,50,000 is interest and 50,000 is the principal.
The rental income would not be more than 3000 per month.

1. Can I set off the interest as the loss in the income from house property?

2. I can claim HRA upto a maximum of 15000 per month. if I stay in a rented house, paying rent of about 6000 per month, will I be able to save more on the income tax?

June 23rd, 2009 at 7:55 am
krishnas said:

@Chandu,

Rs.100000 includes the housing loan principle. If you use Rs.100000 as the housing loan principle, then other investments like PPF,NSC,Insurance can’t be declared. But, interest payment on home loan is seperate. You can use upto Rs.150000.

If you have any more doubts please reply to this comment.

Thanks,
Krishna

June 24th, 2009 at 1:23 am
krishnas said:

@RK,

1)Yes..you can set off the income from house property (Rental). Normally this done while declaring the total interest on home loans to exempt from the tax.

2)If you are staying in the rented home, you will be eligible to claim the HRA exemption upto the certain limit.

Thanks,
Krishna

June 24th, 2009 at 1:31 am
PRANAY said:

Dear sir,
IAM A CENTRAL GOVT EMPLOYE OCCUPYING GOVT ACCN. I BOUGHT A FLAT FOR 4.5LACS IN 1999 WITH 3LACS LOAN IN MY HOME TOWN.THE HOUSE IS LYING VACANT AND USED BY PARENTS. I CLAIMED INCOME TAX EXEMPTON AND PAID THE LOAN COMPLETELY IN 2003. I BOUGHT A HOUSE UNDER CONSTRUCTION FOR 14 LACS IN 2003 WITH A HOME LOAN OF 11.37 LACS IN DELHI. POSSESION NOT YET GIVEN. IN 2008 I BOUGHT A HOUSE FOR 22 Lacs WITH A HOME LOAN OF 18 LACS. I HAVE RENTED THIS HOUSE.CAN I CLAIM INCOME TAX EXEMPTON FOR MY DELHI HOUSE AFTER POSSESSION AND PUTTIG IT ON RENT AS WELL AS PUTTING PUNE HOUSE ALSO ON RENT. KINDLY NOTE THAT I AM OCCUPYING GOVT HOUSE AND PARENTS ARE USING MY FIRST HOSE IN MY HOME TOWN? IF IAM ELIGIBLE FOR ANY INCOME TAX EXEMPTION WHAT IT WILLBE AND FOR WCICH ALL HOUSES?

REGARDS
PRANAY

June 25th, 2009 at 1:20 am
krishnas said:

@Pranay,

If the house is under construction, then you can not avail the tax exemption. But, once occupied you can show the home loans in five subsequent assessment years equally. You can do that for your second house.

In your pune house also you can claim the tax exemption even though you rented out.

If you need details please reply to this comment.

Thanks,
Krishna

June 25th, 2009 at 4:00 am
Rohit said:

If we rent the house and get 1 lac as rent/ annum- less 30% maint will give a total rental income of 70k.
Now we are giving 3 lac as a interest/year on this so will my taxable income come down by 70,000 – 300000 = 2.3 lacs? assuming i am claiming the entire tax benefit? Considering that there is no upper limit of the interest paid for rented out property is the benefit only restricted to the rental value or it can go negative as well?

June 26th, 2009 at 9:37 am
Chirag said:

Sir, is the exemption valid only for loans taken from a bank/ outside agency, or is it valid even for loans taken from family members? for example, if I take a loan from my grandmother and pay her monthly EMIs, do I still get the tax benefit? If yes, what proofs do i need to submit with my ITR?

June 27th, 2009 at 5:29 am
krishnas said:

@Rohit,

If you are giving the house for rental, then you can declare the total interest paid for the house loan without any limit. If you have any rental income for that property, that will be set off against the interest paid and remaining can be shown in the tax savings. I hope this clears your doubts. If you have doubts please reply to this comment.

Thanks,
Krishna

June 29th, 2009 at 8:02 pm
Ashish Desai said:

Dear Friends,
Hi to All…
I have some queries.
1) I have bought a Home in my Home Town on Loan from HDFC for Rs. 900000/-. I am paying regular EMIs.
2) I got job @ mumbai and here I got the rented accomodation. The rent is costing me 18000/- per month.
3) So based up on this, Which ever claim sould be beneficial ?
4) Can I claim for both the things or only one ?
Please guide…
Thanx in Advance.
Regards,
–
[AD]

June 30th, 2009 at 1:04 am
krishnas said:

Hi Ashish,

Thank you for the questions. If you are paying the rent, then you will be eligible to claim the HRA benefits up to the limit. I don’t think you can claim whole Rs.18000. Check with your company about these details. For your existing home loans, you will be eligible to deduct up to Rs.100000 for principal re-payment and Rs.150000 for the interest payment.

I hope this clears your doubts. Please reply here if you have more questions.

Thanks,
Krishna

June 30th, 2009 at 1:34 am
KJ Singh said:

Hi,

I have taken a loan for 34L for a property which i would get a possession in 2010. I am paying an installment of Rs. 35K per month. Can i claim the income tax benefit on the interest that i am paying in my monthly installment. The interest would be about 2L per year.

I come in the highest bracket of tax paid and am salaried. I also claim HRA as per the govt regulations.

Thanx
Rgds

July 1st, 2009 at 5:53 am
krishnas said:

HI Singh,

You cannot claim the tax benefits till you get the possession to your house. In this period, if you are paying the interest, it can be claimed in five equal installments once you occupied the house. But, principal repayment can’t be claimed and its lost for ever. That’s the reason why one should choose PRE emi :

http://www.thinkplaninvest.com/2009/03/what-is-emi-and-pre-emi/

If you have any doubts please reply to this comment.

Thanks,
Krishna

July 1st, 2009 at 6:11 am
Chirag said:

Sir,
Is the exemption valid only for loans taken from a bank/ outside agency, or is it valid even for loans taken from family members? for example, if I take a loan from my grandmother and pay her monthly EMIs, do I still get the tax benefit? If yes, what proofs do I need to submit with my ITR?

July 1st, 2009 at 6:49 am
krishnas said:

HI Chirag,

The home loans should be taken from the bank. If you are taking loan from your family members, will not be eligible for the tax deduction.

Thanks,
Krishna

July 1st, 2009 at 6:13 pm
Dinu said:

Sir,

My Home loan interest is Rs 285,000 for the current year for the self occupaid property. Maximum how much I can claim for deduction. Is it 150,000 for the current year and the balance can I carry forward to next year as carryforward Loss in ITR 2. Or I can set off only 150,000 against salary balance I have to ignore. I have only salary Income.

July 14th, 2009 at 4:04 am
krishnas said:

HI Dinu,

You can deduct maximum of Rs.150000 for the interest payment. You canno carry forward to the next year at any cost. If your interest payment is more than Rs.150000 hen you have to ignore that. This rule is applicable if the property is self-occupied. If the property is rented out, there is no upper limit for the inerest deduction. I hope this clears your doubts.

Thanks,
Krishna

July 14th, 2009 at 4:52 am
sivakumar said:

I am planning to purchase a house where me and my wife are co-owners. Whetehr each of us will be eligible to claim 1.5 lakhs towards housing loan interest (that is totlally 3.0 lakhs) . or is the total interest portion which can be claimed limited to 1.5 lakhs for both of us together.

July 17th, 2009 at 11:29 am
krishnas said:

HI Sivakumar,

You both of you are eligible to claim Rs.150000 each. In the same way both of you can claim Rs.100000 for the principal repayment. For the, you have to be co-owner and co-borrower of the loan.

Thanks,
Krishna

July 19th, 2009 at 7:55 pm
Swati said:

Hi

I had taken a home loan of 20 L in Oct 2007 for an apartment, This flat would be ready for possession in Oct 2010. I made a downpayment, I am paying EMI of 18700/- per month, and have paid almost 1.7 L as interest in the last financial year in itself. My bank has given me a certificate of the principal and the interest component paid.

As I understand from above answers, Since the property is still under construction, I am not eligible to claim this deduction . Kindly confirm?

In case I need to claim this after possession, I would have paid almost 5 L interest in the previous three years, Would I be able to claim the interest component after possession. For example in financial year 2011, I would be claiming for the interest paid for the year approx 1.5 L, would I be able to claim the refund of previous payments over the limit of 1.5 L (or the 1.5 L limit covers previous year and current year interest payment)

Regards
Swati

July 21st, 2009 at 4:51 am
krishnas said:

HI Swathi,

1)Yes.. you can not claim the tax since the property is under construction. Once the construction is completed, you can claim the tax benefits for the next five years.

2)How ever the maximum limit for the year is Rs.150000, it includes the previous payment of the interest on loan. For example, your current year interest payment is Rs.150000. Then you have no option to claim the previous year’s payment since you have already reached the maximum limit.

3)Principal payment while construction will not be claimed for ever.

Thanks,
Krishna

July 21st, 2009 at 7:06 pm
Sandeep said:

Hi

I have a property in Faridabad, and am staying in a rented accomodation in Delhi Dwarka region, My office is in Gurgaon.

Am I entitled for Home Loan and HRA benefits.

July 21st, 2009 at 10:19 pm
Swati said:

Can the previous interest be claimed if the property is sold.. Example if I sell of this property after getting possession, Would I be able to recover the interest paid in previous three years ?

July 21st, 2009 at 10:27 pm
krishnas said:

HI Sandeep,

Yes..you can get both the benefits.

Thanks,
Krishna

July 21st, 2009 at 11:01 pm
krishnas said:

HI Swathi,

You cannot do that. But, you have to adjust with Capital Gains. Once you sold it, the property is handed over to another person and you got the profit or loss from that property. You have to start calculating what is your profit or loss on selling that property.

Thanks,
Krishna

July 21st, 2009 at 11:26 pm
jitendra said:

Hi,

I am going to buy a resell property worth of 30L. As the property is old I have to repair some of its area, my question is can I include Cost of property+Registration charge+Repair cost while applying Home loan? Totally it may reach 34L.

Thanks for guidance.

July 22nd, 2009 at 1:23 am
krishnas said:

HI Jitendra,

Yes..you can include all the expenses while applying for the home loans itself. Property cost and Registeration charges are by default will be adding to the home loansamount.

For repair cost if the banker agree, then you can avail that also. Otherwise there is seperate loans available for repairing the houses which is part of home loans. Normally bankers would advice to take that loans also part of home loans. You can read more about Home Loans Top-Up and Home Improvement Loans here:

http://www.thinkplaninvest.com/2009/03/what-is-home-loans-top-up/
http://www.thinkplaninvest.com/2009/03/tax-benefits-on-home-improvement-loans/

Thanks,
Krishna

July 22nd, 2009 at 2:28 am
Bharat said:

Hi Krishna,

I would like to know, what should be the IDEAL distance between my own home and the property where I am living as a tenant. As I read in one of your articles “you should be either living in a different city or at different place within the same city, and not in the immediate vicinity of your house (i.e., the location where you stay should be at a considerable distance from your own house).”

Is there any exact guidelines for the distance between the two properties?

Thanks in advance.

Regards,
Bharat

July 23rd, 2009 at 7:09 am
krishnas said:

HI Bharat,

There is no mention in the exact distance. There can be many reason not staying in the own house. It is not only the distance.

Thanks,
Krishna

July 24th, 2009 at 2:13 am
Swati said:

Hi

I have a property under construction, and possession would be provided in 2010 end, I would have paid interest equivalent to 4L by that time.

If I rent out my property after possession, Would that increase the limit beyond 1.5 L per year and allow me to recover for the interest paid during construction period?

July 26th, 2009 at 12:35 am
Shivakumar said:

Hi,
I have a property in Pune which is rented out. I receive the rent of Rs.5000 in cash from the tenant. The interest component is 3,00,000 and principal component is 60,000. I am currently living in Chennai in a rented house paying rent as 12,000.

What kind of proofs do I need to show while doing to e-filing? Since in my Form 16 it only shows the deductions of Interest on Housing Loan to the extent of 1,50,000.
As per your above points, I should be eligible for the entire amount of tax payable?

Kindly guide me.

Thanks & Regards
Shivakumar R

July 31st, 2009 at 2:47 am
shantanu said:

i am having housing loan

presently i am repayingi it through emi, total emi p.m. about 80000/- and i want to repay partly to bank of Rs. 30000/-

my quary is whether i get benefit of part repayment or not

thanking you

shantanu

July 31st, 2009 at 3:42 am
shantanu said:

i am having housing loan

presently i am repaying it through emi, total emi p.a. about 80000/- and i want to repay partly to bank of Rs.30000/-

my quary is whether i get benefit of part repayment or not

thanking you

shantanu

July 31st, 2009 at 3:44 am
Rohit said:

Dear Krishna,
We have our house as well as loan in the joint name of my wife and myself. But no where in the sales deed or when taking loan have we anywhere mentioned what is the ratio of possession. Is it important to declare this anywhere through an affidavit etc. This is because both of us want to claim the interest benefit for this house in the IT.

August 1st, 2009 at 9:17 pm
krishnas said:

HI Swathi,

It will not increase the maximum limit of Rs.150000.

Thanks,
Krishna

August 1st, 2009 at 9:22 pm
krishnas said:

HI Rohit,

It is not required to mentioned in the deed. You can claim the tax benefits in the ratio of the payment. Make sure that each can get the loan certificate from the bank.

Thanks,
Krishna

August 1st, 2009 at 9:30 pm
Boban Joseph said:

Sir,
I am a salaried man and getting salary of Rs. 162000/- per annum. I am having loan of Rs. 2,50,000/- and of EMI Rs.3100 per month. Can I show the Tax Exemption Statement from Bank for exemption of TDS? Here only Rs.12000/- is taxable. Please give me an answer to my email.

August 3rd, 2009 at 10:21 pm
krishnas said:

Hello Boban,

You can use the home loans statement to reduce the tax burden. Not for reducing the TDS from salary. If your total income is Rs.162000 then you will not get any tax since your taxable income is Rs.2000. Up to Rs.160000 there is no tax. Hope this answer helps you to resolve your doubts.

Thanks,
Krishna

August 21st, 2009 at 10:21 pm
yogesh said:

Dear Krishnas,
I have second home loan this month on ready to use property, principal amoun per anum is 44280, intrest per anum, is 160689. though its not given on rent, i consider this for rent @6000 per month for aug 2009 to march 2010.
my first home loan is having princ. 5000 and intrest of 55000.
now my office accountant is asking some brief statement for second home loan, like gains from property and losses from property.
so how to put in simple format. how to calculate net income from property. rent – property tax- ? % maintenance cost.
what is total deduction inder 80c, and what under 24 or 24b.
pls guide or give brief statement to be produced to my office.

August 25th, 2009 at 5:59 am
yogesh said:

Dear Krishnas,
Can you guide me about wealth tax,
1. If my new property is of 26L in agreement. how much wealth tax will i have to pay. my 1st property is registered for 7.5L 4yrs back. and now it could be market valued at 15L.
2. What is good option to pay weath tax, on my 1st property or 2nd.
3. Do i have to pay property tax even though both are on loan.
4. Do wealth tax is calculated on combined value of both houses
or on only single, which is non occupied or can it be calculated on occupied.
5. Which property should i show as occuied, 1st or second.
6. can you give me rate of rent as per Maharashtra Rent Control Act. for my properties at locations 1) PUNE city limits and 2) village out side pune city limit .

August 26th, 2009 at 9:15 pm
Ashish said:

Hi,
I already borrowed a loan from my company of Rs.3.5 Lac& taking tax benefit.I brought another property of Rs.20 Lac & take home loan from Bank.Both properties in same city.I want to know that will I got the benefits of IT on interest paid on both loans or not & how can I got max. benefits for tax rebete.Kindly reply..

August 31st, 2009 at 11:06 am
krishnas said:

Hello Ashish,

Please read this article:
http://www.thinkplaninvest.com/2009/08/income-from-house-property/

Thanks,
Krishna

August 31st, 2009 at 5:22 pm
Vipul said:

Dear Sir,

I am a central government employee and intend to avail of the House Building Advance from my employer for a flat. Under this advance, the principal repayment starts first, and the interest (calculated as simple interest) is paid after the full principal repayment is complete (about 10 years later). However, the interest is computed on the reducing monthly balance.

Since Section 24 mentions the ‘interest payable’, my understanding is that the accrued interest on the loan amount shall be deductible from my income from the house property (and ultimately adjustable from my salary income if the rental income is less than the interest paid). This deduction will be available even for the years before the interest payment actually starts.

Please confirm that this understanding is correct

Vipul

September 15th, 2009 at 5:09 am
Siva said:

Dear Sir,

I work at Chennai and my mother has a property house on her name and its her hard earned property not ancestral property.

Can i able to buy the same house by going for a housing loan.

Will i be eligible for that

I have all the documents needed

Mainly i wanted to know that if i go for the housing loan and buy that house will i be eligible for Tax exemption.

Kindly help me in this regards,
Siva

October 12th, 2009 at 2:18 am
krishnas said:

Hello Siva,

Yes..you can buy the house from your mother and avail the tax exemption. Note that you must get the loan from any of the financial institutions like banks,etc.

But, approving the housing loan is depends on the banker’s decision.

Thanks,
Krishna

October 12th, 2009 at 8:31 am
krishnas said:

Hello Vipul,

It will be deductible only when you can actually pay the interest amount. You must get the interest paid certificate from the banker and submit it.

Thanks,
Krishna

October 12th, 2009 at 8:35 am
Niraj said:

Hi Krishna,

Can I take money from my father as a home loan and claim for Income Tax benefits on-

1. Principal repayment
2. Interest paid

Thanks & Regards,
Niraj

October 19th, 2009 at 5:49 am
krishnas said:

Hello Niraj,

If you want to avail the Income Tax Benefits for home loans, you must take from the financial institutions.

Thanks,
Krishna

October 19th, 2009 at 7:27 am
Niraj said:

Thnx.. Krishna

October 19th, 2009 at 7:32 am
krishnas said:

Hello Niraj,

You are always welcome. Read our useful articles and leave your comments if you have any doubts. I will answer your questions.

Thanks,
Krishna

October 19th, 2009 at 7:34 am
phani kumar said:

Hi.. Sir..

My query is, One of our employee’s husband taken home loan on his name and getting IT benefit. Both or staying in own house only. Both are woring different companies. She want to avail rent benefit. Is it possible to get the benefit..

I am awaiting your reply.

Phani Kumar,
Medvarsity Online Limited

October 23rd, 2009 at 6:49 am
krishnas said:

Hello Phani,

If you are staying in the own house, you could not avail the HRA benefits. Since she is staying in the husband’s house, its like her own house only. Cannot claim any rent benefits.

Thanks,
Krishna

October 23rd, 2009 at 6:38 pm
Divya said:

Hi, I would like to know what are the tax exemptions I can claim

1. I have a home loan for a house in my native place. And my family (parents) stay in the house. Loan for this house was taken by pledging property (which is in my mother’s name) and also based on my salary income – inshort this is a joint loan.

2. I reside in a rented house in Mumbai.

In the above scenario, can I claim HRA and Tax exemption for Principal repayment and Interest repayment.

November 4th, 2009 at 10:23 am
krishnas said:

Hello Divya,

1. If you get the home loans then only you can claim the tax benefits. Note that if the house is in your name. Other wise cannot claim the tax benefits. I would advise you to ask the banker whether it comes under the home loans or loans against property.

2. Yes. you can claim the HRA exemption.

Thanks,
Krishna

November 4th, 2009 at 4:41 pm
Bhreegu said:

Hi

I am paying EMI for a property underconstruction. I would have paid about 6 lacs worth interest by the time the construction is complete. I understand I can claim this in the following 5 years. But when do I claim the interest I would pay during these 5 years? At 1.5lacs a year I would get to claim benefit only on 7.5 lacs worth interest while I would Have paid interest worth at leat double. Is this how the system works or am I reading it wrong? It would help if someone could guide.

Thanks

November 11th, 2009 at 1:29 am
krishnas said:

Hello Bhreegu,

Thank you for the comments. Every year you are allowed to claim Rs.150000 as the interest payment. It includes the interest you have paid during the construction phase. If your total interest amount exceeds Rs.150000, you cannot claim that. But, the property is rented out, entire amount can be deducted.

Free EMail Updates:
http://www.thinkplaninvest.com/subscribe/

Thanks,
Krishna

November 11th, 2009 at 4:11 am
Bhreegu said:

Hi Krishna,

Thanks a ton for guiding.

Refer ‘Income Tax Policies on Interest Repayment’ above, bullet 4 says, the interest paid should not be more than the rent. The Interest I would pay will invariably be more than the rent I would get.
My confusion is in the fact that declaring the income from rent would take my income up by say ‘x thousands’, and it would help me gain from a direct deduction of 150+x thousands from amount on which the tax would be calculated, so in effect am i not reducing my effective income by 150k only and no more? That I could have done without renting my house also, right?
My question I guess should simply be “Will I be able to claim benefits worth 150K(from the pre EMI)+ x (from the rent) + that year’s interest” if I put up the house on rent?
A point I should mention is that this house is far from my workplace and a daily commute is inconvenient. Does that help my situation : )

Thanks again for the prompt response.

Take Care
Bhreegu

November 11th, 2009 at 5:17 am
krishnas said:

Hello Bhreegu,

Bullet 4, that is wrong. I will correct it. The interest payment can be more than the rental income, in that case you have to write down as the loss from house property and adjust in other income category.

Can you summarize your question with points. I can answer your question easily.

Thanks,
Krishna

November 11th, 2009 at 8:06 am
Bhreegu said:

Hi Krishna,

thanks for helping me here.

If I were to put forward a situation, where a house is currently under construction and would be complete by 2011, consider the following:
-Annual Salary (FY 2011) : 500,000
-Intrest paid (FY 2011): 200,000
-Interest paid (pre EMI): 300,000
-Income from Rent: 60,000

Would the taxable income for 2011 be
(5.0 lacs + 0.6 lacs) – 2 lacs – (3 lacs devided by 5)?

Thanks again
Bhreegu

November 12th, 2009 at 7:45 am
krishnas said:

Hello Bhreehu,

Your equation is correct if the house is not self occupied and let out.

Thanks,
Krishna

November 12th, 2009 at 8:09 am
saji said:

Hi,

My question is if one want to claim pre-emi for the current financial year. Will he be provided tax exemption on interest on housing loan.

Regards
Saji

November 17th, 2009 at 4:13 am
krishnas said:

Hello Saji,
You can claim only after the construction is over.

Thanks,
Krishna

November 17th, 2009 at 11:13 pm
vinay said:

my father and i are planning to buy a house jointly. however he is not ready to take a home loan on his name. he has a certain amount in his account by selling our previous flat. is it possible that my father pays the total amount got by selling the previous flat and i take a loan on my name for funding the remaining amount to buy the new flat?

December 2nd, 2009 at 6:25 am
krishnas said:

Hello Vinay,

Yes. You can do the same. The requirements are:

1. you must be the co-owner of the house.
2. Loan must be in your name

Thanks,
Krishna

December 2nd, 2009 at 7:17 pm
K K SINGH said:

I am associated with Indian Oil and posted in Panipat Refinery, recently I have purchaged a home at Noida (construction linked) and for that I have been loaned Rs 20 lacs.

let me know the varios aspect of getting the tax benefit.

December 3rd, 2009 at 12:18 am
krishnas said:

Hello KK Singh,

Thank you for the comments.
You can claim the tax benefits only when the construction is completed. You can claim Rs.100000 for the principal payment and Rs.150000 for the interest payment. Do you have any idea when the construction will be completed?

Reply with the details and if you have any questions post it here. I will answer your doubts with details.

Thanks,
Krishna

December 3rd, 2009 at 10:46 pm
Aditya said:

Hi,
I’ve booked a property under construction. I’ve paid 1.5Lacs in interest and 50,000 in principal. I’ve the relevant document from bank.
Possession of my property is expected in Feb’ 2010.

My company is demanding the investment documents now, they are not ready to consider the interest part for exemption and Principal will be part of section 80C.

Provided I do get the possession in this financial year, how can I claim my exemption for interest which includes the pre-emi?

December 4th, 2009 at 5:44 am
krishnas said:

Hello Aditya,

If you are not able to submit the documents now, did you ask your bank to give the documents. they will issue the loan payment certificate each year. You can submit the documents. It is normal that the collecting for documents will start now onwards. If you can not get it now, you have to file for the IT returns and get the refund.

Thanks,
Krishna

December 4th, 2009 at 7:36 pm
dps said:

i have purcase home in aug 07 , i want to sell that home,i want to know if i sold home within three years then what type and percentage of income tax to charged
incometax to be charged on total sell price or only income price

December 6th, 2009 at 1:30 pm
krishnas said:

Hello Dps,

The income will be charged on only income price.

Thanks,
Krishna

December 7th, 2009 at 5:05 am
Ray said:

Hello!

You have mentioned that “If you have taken the home loan in joint name, the Tax Benefit (for both Principal Repayment and Interest Paid) would be available to both of you if the house is also in joint name.” – when we (me & my wife, as we are the joint owners of the house & the home loan amount as well) claim for Tax Benefit, would one halve the total Principal Repayment and Interest Paid for the year and then do our tax-computations?

For example..if the total Principal Repayment and Interest Paid for the year turns out to be 100000 & 150000 respectively, should our individual rebate will 50000 & 75000 respectively?

Thanks in advance! Regards!!

December 12th, 2009 at 11:24 am
sandeepk said:

I do not know whether this is right platform to ask this question, but as my question is related to home and tax both parts, I am asking it here.

I am buying a house from NRI. Does he needs to get some kind of undertaking/clearance from IT? In case he does not get it what are the complications for me as well as for seller?
What is the procedure for doing the needful and how long does it take?
I would be greatful if you can answer my query with reference to respective section numbers of IT.

December 13th, 2009 at 9:14 pm
Deepa said:

Hello Krishna,
Your article is very information. I have a query regarding repayment of the complete loan.
Me and my husband had taken a loan of Rs. 10 lakhs 3 years back. As mentiond in your article, we were claiming for income tax rebate for both principle amount and interest.
This year(around Jun 2009) we completly paid-off the remaining loan amount along with the prepayment charges.
Now, my question is for this year(2009-2010) how can I claim for income tax rebate?Does preclosure of the loan attract any income tax benefit?

December 24th, 2009 at 2:55 am
krishnas said:

Hello Deepa,

If you have preclosed the loan, then also the same maximum limit you can claim as the tax rebate. For example, if you have prepay the Rs.300000 principal amount, you can claim only Rs.100000.

Thanks,
Krishna

December 25th, 2009 at 9:07 am
Aditya said:

Hi Krishna,
I’ve booked a flat under construction for which possession is expected in Mar’ 2010. I’ve the loan payment certificate from my bank clearly mentioning the interest and principal part.
I’ve submitted these documents to my company for tax benefit but they are demanding for the possession letter.

Whereas I’ve seen other companies accepting the claim in same situation. I’d like to know the exact rules on possession.

Thanks in advance.

January 5th, 2010 at 12:20 am
Kapil S. said:

Hi Krishna,
I booked an under construction Flat in Apr-09 in same city where I was living in a Rented Home. I did Agreement on 17-Apr-09 (Paid Registry 22770/- & Stamp duty 95800/-). Home loan (Rs.2200000) was senctioned in Apr-09 & I started paying EMI installments (Rs.19447/Month, inclucing principal & interest) from 01-May-09 onwards. I got the possession on 2-Dec-09. For Income tax declaration purpose I collected “Provisional Certificate” from bank mentioning the installment amount under my loan account for year 2009-10 as follows…

Towards principal : Rs. ****42120.03
Towards interest : Rs. ***156804.87

Date of loan senctioned : 30-Apr-09 Rs. 2200000.00
Purpose : Purchase of flat under Construction.

For Rented Flat,
I’hv all Rent receipts from Apr-09 to Dec-09 (later-on I was shifted to new flat).

My Query is… What information I should need submit for maximum Tax benefits. Please clarify according to the break-up amounts & months for the Rent receipts / Interest / principal / Registration / Stamp Duty.

Please let me know if more information is required for the resolution of my query.

Regards
Kapil

January 11th, 2010 at 7:02 am
krishnas said:

Hello Kapil,

Stamp duty, registration charges etc are added in the cost of home purchased. So, it must be the part of principal. So, you can claim the same in the financial year with the maximum of Rs.100000. It seems you have paid more than Rs.100000. In that case remaining amount can not be claimed.

Also you can claim the Rs.150000 towards the interest payment. And HRA can be claimed till you stayed in the rental house. That will be covered under section 13A.

Thanks,
Krishna

January 12th, 2010 at 12:44 am
Chaitanya said:

Hi,

I have taken a housing loan of 13.5 lakhs, and even before the complete amount was disbursed, I took enhancement loan of additional 5 lakhs. My house is still under construction and I am currently staying in a rented house. Bank has disbursed the total first part of my loan i.e. 13.5 Lakhs, since I have taken enhancement loan. As of now, I am paying Rs. 14,800 as EMI for 13.5 lakhs since August 2009 and 600 as pre-emi for 1 lakh (part of enhancement loan disbursed, 4 lakhs yet to be disbursed).

My doubt is can I show interest(approximately Rs. 1,37,000 PA) that I am paying for 13.5 lakhs for Tax exemption, though my house is still under construction and I am staying in rented house. I think the construction would not finish before March 2010. Kindly let me know the info and options(if any) for TAX exemptions.

January 12th, 2010 at 4:48 am
krishnas said:

Hello Chaitanya,

You can not claim the tax benefits if the construction is not completed.

Thanks,
Krishna

January 12th, 2010 at 5:35 am
krishnas said:

Hello Aditya,

You have to show the possession certificate to claim the tax benefits. That is the rule by govt.

Thanks,
Krishna

January 12th, 2010 at 5:41 am
krishnas said:

Hello Deepa,

I think you have preclosed means the principal part of the loan. That can be claimed maximum of Rs.100000 each. Not more than that.

Thanks,
Krishna

January 12th, 2010 at 5:50 am
Prasad Kumar said:

I puchased an house Last year. I took loan which is ADF ( Fully Disbursed from day One), ie I am paying an EMI from the first day I took the Loan and PreEMI=0.
I will be getting possession in the month of start of March 2010.

For tax benefit Can I get tax benefit on interest to max 1.5 lacs for this finacial year, and can I also claim HRA benefit from April 2009 till Feb 2010.

Can you suggest….

January 12th, 2010 at 6:26 am
SANJAY BABU said:

I PURCHASED A HOUSE IN THE NAME OF MY MOTHER. MY MOTHER IS WHOLLY DEPENDENT ON ME. WE ARE LIVING IN THIS HOUSE. I TOOK A LOAN FOR THIS PURPOSE FROM LIC HOUSING FIN. LTD. LIC ISSUED TWO CHEQUES OF EQUAL AMOUNT IN THE NAME OF MY MOTHER AND ME. I AM PAYING THE EMI THROUGH ECS. COULD I TAKE THE BENEFIT OF REPAYMENT OF HOME LOAN AND INTERST PAYABLE ON IT? AND HOW MUCH PERCENT? WAITING FOR THE ANSWER.

January 15th, 2010 at 8:55 am
krishnas said:

Hello SANJAY BABU,

The house must be in your name to get the tax benefits.

Thanks,
Krishna

January 15th, 2010 at 10:27 pm
krishnas said:

Hello Prasad Kumar,

Yes. You can claim both the benefits.

Thanks,
Krishna

January 15th, 2010 at 10:55 pm
krishnas said:

Hello All,

Consulting Service for Home Loans and Tax Benefits through phone. It is just for Rs.250
http://www.thinkplaninvest.com/contact/consulting/

Thanks,
Krishna

January 26th, 2010 at 6:58 am
Andi said:

Hi,

I am planning to buy a property in pune and give it on rent. I and my wife, both are staying as well as working in mumbai. We both are tax payers. What do you suggest for us ? Should we take home-loan as co-borrower/co-owners for tax benifits OR only I myself should take the full loan. Which option do you think is more benifitial.

Please reply. That would be great help indeed. Relevant details are written down below.

Thanks.
Andi.

Relevant Details:
Property Cost: 25 lacs (including everything)
Home loan: 20 lacs for 15 years
Gross Salary of one individual: 5 lacs/annum

January 27th, 2010 at 1:38 am
sandeep said:

Dear krishna,
I have bought a house in Mumbai which are actually two adjacent flats. The building is old and plan is not available. Old agreement only mentions two flats as flat no. 28 and 28A. The individual area is also not mentioned.
Kindly tell me whether I can avail second home loan benefit (100% no tax on interest portion) on this house if my present home loan is common on both the flats.
If yes then how is it computed?

January 28th, 2010 at 2:57 am
Vaibhav Phadnis said:

Sir
I have purchase a flat in Pune(Maharashtra) on 21st Jan 2010. During purchasing i have paid Rs. 13800 for Registration & Rs.51200/- as stamp duty. Can this both be deductible u/s 80C(b) of Income Tax Act 1961.from my salary.

Secondly is there any tax rule or regulation that unless & until i do not get possession letter from the builder the above tax or duties cannot be deducted. The possession letter should be received within the same financial year to avail deduction in which you have paid stamp duty & registration. As the said premises is under construction & will take time to complete it till Oct 2010 can above taxes are deductible.
Pl guide

Regards

Vaibhav Phadnis
phadnis.v@tatamotors.com

February 1st, 2010 at 10:20 pm
Deepa said:

Hi Krishna,
In the financial year 2009-2010, we had paid only one EMI of the home loan and then we had repaid the loan completely. They had charged the preclosure charges. In the provision certificate that they gave they had mentioned that “Simple interest on prepayment”. Now my question is can I show this “simple interest on prepayment” in additon to the interest paid as part of one EMI for tax emption under section 24 c?

With regards
Deepa

February 4th, 2010 at 12:28 am
Amitabh said:

HI,

I am buying a flat for which i have made a down-payment of Rs.2,35,000/- which also includes Stamp-duty and Registration too. Will i be able to avail the tax benefit on the above payments made to builder or the stamp-duty & registration.

Early response would be highly appreciated.

Regards,
Amitabh

February 10th, 2010 at 12:01 am
SANDEEP said:

Dear krishna,
I have a query. I am buying a house in Mumbai which are actually two adjacent flats. The building is about 40 years old and plan is not available. Old agreement only mentions two flats as flat no. 28 and 28A. The individual area is also not mentioned.
Kindly tell me whether I can avail second home loan benefit (100% no tax on interest portion) on this house if my present home loan is common on both the flats.
If yes then how is it computed?

February 10th, 2010 at 12:51 am
Vinod.V said:

My self and wife jointly availed home loan for purchasing a flat .The flat is registered in my name and she is a co-owner. we are working in different departments. is it possible to claim 100% tax benefit from the above home loan taken jointly? what arwe the procedures for that?

February 10th, 2010 at 7:10 am
sandeep said:

I have booked flat and made registration on 20 th Jan 2010. But possession of flat will be on May 2010. Please clarify that can i get tax benifit in stamp duty and registration amount (Rs. 171000) for this financial year 2009-10.

February 10th, 2010 at 10:25 pm
Narasimhan said:

Is home loan tax exemption available for two persons if they have taken jointly home loan and own the property also jointly?
If so, whether the interest limit is 1.5 lacs for each or 1.5 lacs total?

February 12th, 2010 at 9:17 am
Nivetha said:

Hi,
Our home is jointly owned by me and my husband and we have also taken the loan together. I used to claim the benefit completely and my husband doesnt claim any tax benefits. This year, our finance person saying that i can claim only 50% of principal and interest which comes to 20k of principal and 90k of interest. Is this true? Is there any way for me to claim 100%?

Thanks,
Nivetha.

February 16th, 2010 at 1:32 am
Rajesh Nair said:

Hi,

I have a house in Kerala where my parents are staying. I am here in Bangalore and I have house there as well. Both have loans and can I avail the tax( principal & interest) for both?
-Rajesh

February 16th, 2010 at 9:29 am
Pritesh said:

I have booked flat and will do registration by first week of March 2010. But possession of flat will be in March 2011. Please clarify that can i get tax benifit on stamp duty and registration amount in next financial year (i.e. 2010-2011).

February 16th, 2010 at 9:36 pm
Rajesh Kumar said:

Hi,

thanks for this nice article… Please help me in the following scenario and let me know the tax benefits that I can avail…

I purchased a DDA old flat in Aug 09
I am not occupied the house due to renovation
Till march 2010, I stayed in a rented house with a rent of 6500 per month.
Principal amount to be paid for the FY 09-10 : 20436
Interest amount to be paid for the FY 09-10 : 58376

Please let me know if I can claim tax rebate (HRA) on the rent paid till March 2010 or not. Can I avail the entire interest component for tax benefit?

February 19th, 2010 at 2:06 am
Raghu said:

i took home loan in which my wife is a co applicant. But i am paying the EMIs from my account as my wife is a house wife. However, income tax statement provided by bank shows my name followed by my wifes. My office says i can only avail 50% tax benefits. Is this true and how to go about it to solve this issue.
thanking you in anticipation.
Raghu

February 23rd, 2010 at 3:58 am
Ramesh said:

Hi,
I have purchased a flat in Bangalore and registered end of 2008. By May 2009 I got transferred and shifted to Chennai which is my current work location. I stayed in my house in Bangalore only for about one month in April 09.

I have not let out this property in Bangalore as I need to get the interiors done for which I need some funds and at present am saving to create that fund. I would be getting this completed by end of 2010.

The question from my side is: I am paying rent in Chennai and have not let out the property in Bangalore, no income from this property.

What would be the best way to get maximum tax benefits?
Thanks
Ramesh

February 23rd, 2010 at 6:19 pm
George said:

Sir,

I have take two housing loans for two apartments. One unit is rented, while other is vacant. For taxation purpose I am considering non-rented unit as also rented, with a fair market rent (FMR). I pay EMI for both loans, as details as below

Total principal per yr : 2 lakhs
Total interest per yr: 5 lakhs
Total rent per yr (including FMR for 2nd unit): 3 lakhs

My computation of “income from properties” is as follows

Rent – 30% for maintenance – Yearly housing loan interest =
= 3 L – (30% of 3L) – 5L
= – 2.9L (loss)

I have a taxable salary income of 10 Lakhs and I reduce loss made in house property (2.9 L) from it. This brings my effective taxable income as 7.1 Lakhs.

My question on this are

1) Is my computation correct ?
2) Should I pay tax for the rent, i.e for 3L
3) If I don’t have to pay tax for rent, then why do govt make such clause (sec 24) in which there is no limit for tax deduction for rented units. This is not logical.

Just to make a point, this forum is awesome and highly informative. I have forwarded the link to couple of my friends..

March 5th, 2010 at 8:03 pm
Dilip said:

Hi,

My Home Loan Details Paid from April 2008 to March 2009:

Total Paid: Rs. 86,096/-
Principal: Rs. 3,504/-
Interest: Rs. 82,592/-

I am staying in the property and it was never rented. The loan was taken in 2005 and we started living there from 2006.

My questions are:

1. My tax-advisor says I CANNOT claim tax deductions under Section 24(b) for the full amount of Interest paid of Rs.82,592/-. He says the tax-deductions as per Section 24(b) can be availed only for Rs. 30,000. Is he right or can I claim the full amount for tax-deductions?

2. My wife is a co-applicant of the home loan however the house is registered in my name. Can she pre-pay a partial amount of the loan and claim tax benefits under Section 80(c)?

Many thanks.

Dilip

March 10th, 2010 at 12:38 am
kumar said:

Sir,

I am salaried and working in Bangalore. i am getting 5.0 lac salary. I have property in my native where i am applying for home loan for reconstruction (Extention).
1. Whether i will get any tax exemption.
2. If i construct and letout for rent i will get rent Rs. 15000/- and my EMI around 15000/- per month( ie. 1500000 for 15 yrs- 15000/ per month).
so, could you plese tell me how much i will get tax benifit.

April 10th, 2010 at 12:14 am
rajeev said:

PL confirm if tax rebate is allowed for alteration/modification of house which is on my fathers name. I am a TDS employee.

April 11th, 2010 at 1:02 am
divya said:

Hi,
I have 2 home loans – one for the house Im staying in (Bangalore) and another rented out (Chennai). Last year I had classified my Blore house as self occupied and Chennai as rented out. Since the income from property (chennai) was lower than interest outgo I had claimed tax refund while filing return last year. Even after a year I havent got any till date. For this year can I
1)put my Blore house as rented and Chennai as self occupied because I have a higher interest component on my Chennai home which can be deducted from my taxable income (since this will be done by my office accounts – im sure to get this benefit unlike tax refund which I may never get !!

Is this allowed – considering I stay and work in Blore ?

2)How long do these tax refunds take ?

April 11th, 2010 at 11:19 pm
Jacob said:

I am planning to buy an already contructed house from a builder, who wants to sell it at Rs 31 Lacs. Perhaps after negotiation it can be Rs 30L.
Now actually I am in no need for this house, since I stay with my parents and that house is on my mother’s name. I am the only son, with one sister married and nothing left to give her.

My intention is to take a loan from any good bank for a long term and rent this house. I should get nearly 6000-7000 Rs monthly rent. I also want to use the interest paid to the bank as my tax saving plan. Please note that I pay 100000 Rs as LIC Policy Premium and so 80C is full.

Kindly suggest me on how to proceed.

Regards
JACOB

April 20th, 2010 at 6:09 am
upender said:

If a house, on which income tax rebates were availed, is sold within five years from completion of financial year in which the house was purchased- all the rebates availed are to be paid back as income tax? If so, under which section/rule?

May 10th, 2010 at 1:56 am
P Kishore Kumar said:

Hi

I have two home loans running and iam paying both EMIs. One is self occupied and another one is let out

As of now iam availing tax rebate on one house. How to avail on another one

Details of my second home loan is

Sanctioned amt is 14,00,000

Interest paid annually is Rs 1,25,000

Principal paid is Rs 21,000

How to computate in the form 12 C application ?

what is the let out rental rate i suppose to show? more over what are the documents i suppose to enclose to avail the tax benefit on second loan

details of first loan is as follows

Sanctioned amt is 6,00,000

Annual principal paid is 10,000

Interest paid is 56,000

Please clarify in details

June 1st, 2010 at 6:11 am
AK said:

I intend to buy a second home but it is under construction as of now, possession by Feb2010. Thereafter I intend to rent it out from March 2010.
Annual interest from July till March 2010 = INR 2,70,000
Rent expected for March 2010 = INR 12,000

Can you guide me whether 12,000 – 2,70,000 – 3600 (Standard Deduction of income) = -2,61,600 would be deducted from my taxable salary? I ask this question specifically to know whether any notional rent from July till Feb will be assumed during the under-construction phase of my 2nd home or not?

June 2nd, 2010 at 3:15 am
Abhijit Mone said:

I had query for my wife’s IT deduction.

1)She is Having HRA paid .3700 per month
2)She Pays Rent on our family behaf Rs. 6000/-in pune
3)We had home Loan ,for underconstruction porperty for 19.50 lacs jointly owned loan against property.
4) for the same we are having pre- emi of about 113000/- total .
she would be considering 6000/- per month as an interest paid from her a/c &balance by me ( co-applicant )
5) so does this 72000 interet would be cosindered for tax benifit ,along with tax benifit of HRA – house rent ? – if yes under which section.

Please revert with your commnets

Abhijit / Apurva

June 10th, 2010 at 4:34 am
Abhijit Mone said:

Hi

I had query for my wife’s IT deduction.

1)She is Having HRA paid .3700 per month
2)She Pays Rent on our family behaf Rs. 6000/-in pune
3)We had home Loan ,for underconstruction porperty for 19.50 lacs jointly owned loan against property.
4) for the same we are having pre- emi of about 113000/- total .
she would be considering 6000/- per month as an interest paid from her a/c &balance by me ( co-applicant )
5) so does this 72000 interet would be cosindered for tax benifit ,along with tax benifit of HRA – house rent ? – if yes under which section.

Please revert with your commnets

Abhijit / Apurva

June 10th, 2010 at 4:41 am
Amit Arora said:

Me and my mother taken home loan from bank. But i am the person who is repaying the loan as my mother have no income source. The registry of house is on my mother name and installments are paying from my salary account. Can i eligible for home loan tax benefits or not. Please clarify. If not then what is the solution for this. Reply asap.

June 30th, 2010 at 5:46 am
Surinder M Chopra said:

I have availed a loan of 20 lacs and a top up loan of 4 lac. the repayment of interest is 1,70,000/- and 48,000/-. 1/3 rd portion of the house has been rented out for 96,000/- and 2/3rd portion is self occupied. kindly calculate the interest exemption under sec.24 or so.

July 2nd, 2010 at 9:14 pm
Narendra said:

In case of a house, part of which is rented and owner lives in other part:
Is this considered as rented or self-owned?
Can assessee claim full interest paid for exemption as “loss from house property” for the borrowed capital? (instead of just 1.5 Lakhs)

July 8th, 2010 at 3:26 am
Murty said:

Hi,
I would like to take a Rs.30 Lakh loan for 10 years.@9% interest

My annual interest payment is Rs.270000
My Annual principal payment would be Rs. 186000
I propose to give it on rent for Rs.100000per annum
I am ready to go like this for 10 years
My salary is Rs.1036000 this year
I stay on rent by paying Rs.168000(I get Rs.108000 exemption)
My question is What would be my tax for the FY 2010-11?
Correct me, if iam wrong
Salary after HRA=Rs.928000
Salary after Section 24(b), as I am not staying in the above house: Rs.928000-270000=Rs.701000
Total income: 701000+100000(Rental income)=801000
Deduction under Section 80C and Medical insurance:Rs.138000
Taxable Income: R801000-138000=Rs.663000
Income tax:Rs.66600

July 12th, 2010 at 11:17 pm
Murty said:

In the above case, my tax out go would be different:
I can save around Rs.300000 per annum, under 80C, allowed under DTC.
Then the taxable income would be Rs.801000-300000=Rs.501000
The tax outgo in FY 2011-12 would be Rs.30000.
Anything wrong???

July 12th, 2010 at 11:28 pm
Roushon said:

Dear Krishnas,
I have purchased a flat on bank loan in my native place in
West Bengal jointly with my wife. In this flat my parents are
staying. I have no income from this flat. I am a central government
employee and live in government flat in Mumbai and own no flat/house in Mumbai.
I will be thankful if you kindly tell me the tax benefit
I will receive from the principal and interest amount I pay for the loan.

Regards
Roushon

July 22nd, 2010 at 10:07 pm
bala said:

I have a own house which i let out. In the same city i am staying in another rented house. In this case, can i claim both HRA and interest benefits for the let out property?

July 28th, 2010 at 4:19 am
Ram said:

Hi,

I am planning to apply for housing loan for purchasing a land.
Can we claim the interests that we paid for this housing loan ? The Construction will be starting after two years.

August 6th, 2010 at 4:48 am
BK said:

Hi,

I am staying in my mother’s house. I pay rent to her. Thus, I utilise HRA.

I have a house (within 1 km of the above mentioned rented accomodation). I have taken a home loan for it. I have let it out. Rent is Rs.30,000 per year and the interest is Rs.1,90,000 per year and principal is Rs.50,000 per year.

Now I have bought another house. I have taken a home loan for it also. I have let it out. Rent is Rs.40,000 per year and the interest is Rs.2,20,000 per year and principal is Rs.70,000 per year.

My place of work and all the above 3 houses are in the same city.

Plz address the following questions:
1. Am I (legally) correct in claiming HRA (staying in my mother’s house)? I ask because I afterall have 2 houses of my own in the same city.

2. Is there any limit on the interest I can claim for tax benefit? I ask because it appears that there is no limit for rented houses. For me, both my houses are rented. So, can I claim as loss from house property as Rs.1,60,000 (apprx.) [1,90,000 - 30,000] and Rs.1,80,000 (apprx.) [2,20,000 - 40,000] for my 2 houses?

Thanks for your time. Hoping for clarity from you plz.

August 6th, 2010 at 8:10 am
RAJEEV said:

Sir,
I am a govt. servant and my wife is housewife and she has no other income. I am taking Home Loan in which my wife is co-applicant. I want to purchase the house in my wife’s name. I will pay the EMI from my salary. Can I get the tax rebate?

August 11th, 2010 at 10:52 pm

Home Loans and Income Tax benefits

Introduction

Tax Limitation on Home Loans

Income Tax Policies on Principal Repayment

Income Tax Policies on Interest Repayment

Few Examples would help to understand

Some of the terms used in the Home Loans:

Use our consulting service for Home Loans (JUST Rs.250)

Summary

Update : Home Loans and Income Tax Benefits – Part 2

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Home Loans and Income Tax benefits

Introduction

Tax Limitation on Home Loans

Income Tax Policies on Principal Repayment

Income Tax Policies on Interest Repayment

Few Examples would help to understand

Some of the terms used in the Home Loans:

Use our consulting service for Home Loans (JUST Rs.250)

Summary

Update : Home Loans and Income Tax Benefits – Part 2

Related posts:

157 Comments on this post

Trackbacks

LEAVE A COMMENT

Subscribe to Blog

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