In this article I will be writing about the home loans and the calculation involved in the interest repayment. In my previous article titled Home Loans and Tax Benefits explains about what are the tax benefits while taking the home loans. But, it doesn’t write much about the interest repayment and the different scenarios while owning the multiple houses. This article intend to teach you how to utilize the interest repayment on home loans when you have many properties and have rented out few houses. I would like to hear feedback from you, Please post it in the comments section. If you like the article, please get free email updates.
Articles on Home Loans
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In our blog I have published home loans related articles in the past. It would be nice if you have read those articles to gain more knowledge on the home loans and tax benefits.
- Home Loans and Tax Benefits
- Tax Benefits on Home Improvement Loans
- What is Home Loans Top Up?
- Information on Home Loans
Home Loans and HRA
Many people confuse that if you have the home loans then you are not eligible for the HRA deduction from the income. That is not the correct opinion, in many case people buy the house and for some reason they will stay in the rented property. In that case they are eligible for the HRA exemption. The exemption of HRA is covered under Section 10 (13A). The following conditions are needed to allow the HRA exemption:
- The rent must be actually paid by assessee.
- The rented property is not owned by the assessee. The section does not enforce any rules if the assessee owns any other property. So, that is irrelevant to the case.
- Principal portion of the home loans will not affect in any way to the HRA or interest payable.
Home Loans and Interest Payment
- Here I will be writing about the various scenarios involved in interest paid on home loans. There may be scenarios where one person owns many properties with different city. This section will explain you with example of how to calculate the tax benefits on that scenario.
- If the person self occupied the property, then it is direct deduct from the income. For example a person paid Rs.120000 for interest on home loans. His total income is Rs.400000. Then his taxable income is Rs.400000-Rs.120000=Rs.280000. (Other tax deductions will be added). There is upper limit of Rs.150000 as interest payable if the property is self occupied. The limit is applicable for the person owns multiple home loans for more than one property, if the property is self occupied.
- If the property is rented out, then the annual value (income as rent) will be calculated for that property. The formula will be like this:Annual Value (Rental Income) – 30% as the standard deduction – Interest Payable on home loans = Income from house property.
- In the above scenario, income from house property can be negative when the interest payable is more that rent received. In such scenarios the loss will be deducted from the total income. For the rented property there is no limit on the interest payment. For example, the total rent received in particular year is Ra.100000. the same year interest paid on home loans is Rs.300000. Then Rs.200000 (300000-100000) can be deducted from the total income. This calculation is for the rented property.
- If the property is vacant, not rented out and also not self occupied. The you will have to calculate the rental value based on the market and location of the property. That notional vale will be used for the calculation.
- There is nothing in the section that affects the exemption of HRA at all. Also, there are no conditions that restrict the availability of deduction of interest based on the assessee’s stay in any other premises.
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Summary
I have written many in depth details about the interest payment on home loans. This would be sufficient for the tax deduction and post your comments if you have any doubts. I will be happy to answer all your questions. If I have missed out any of the points, will come up with another article explaining the home loans and benefits. Thank you for reading the article.
January 20, 2011 at 1:13 am
My question is, I have already purchase one house by housing loan for which regularly loan is being paid to Bank wherein my parents are residing who are retired person and not financially dependent on me and secondly I have recently purchased another house for which I am regularly paying the monthly installment also. Can I get the benefit of income tax of both the housing loans which are in my name, please clearly mention.
January 20, 2011 at 1:14 am
My question is, I have already purchased one house by housing loan for which regularly loan is being paid to Bank wherein my parents are residing who are retired person and not financially dependent on me and secondly I have recently purchased another house for which I am regularly paying the monthly installment also. Can I get the benefit of income tax of both the housing loans which are in my name, please clearly mention ?
January 20, 2011 at 1:25 am
Please also make comment about the upper limit of Principal Amount which is deducted under 80C, however you have already given comment about the upper limit of interest of Rs. 1,50,000/-.
January 20, 2011 at 4:47 am
Hi,
My husband has a residential land gifted by his father. We are planning to build a house in that property and we are taking a home loan. Is it possible for a joint loan (me and my husband) and can I also get tax deduction for the same?
Thanks,
Nandini
January 20, 2011 at 9:19 pm
we purchase a house property on joint name me & my hunsband but we taken loan only on my husband`s name. But my question is that he have a another house on his name where we staying now so after paying all loan amount can wife only show full rent income on her name beacause she is a housewife.
January 21, 2011 at 12:45 am
Hello,
I have the following query:
PRe-EMI paid can be deducted in 5-year equal instalemnts.
e.g. pre-emi paid is : Rs 200000/- in first year; Rs 300000/- in second year; Rs 500000/- in third year.
If i get the possession at end of 3rd year of construction of house then how do the pre-emis will be claimed as tax deductions in subsequent years?
pls verify my understanding:
Total pre-emi is Rs. 900000/- paid in 3-years.
10,00000/5.0 = 2,00,000/- /annum can be tax deducted. but limit/year is only 1,50,000/- so how much tax deduction we get? rs. 2,00,000/- or Rs 1,50,000/-?
January 21, 2011 at 4:25 am
i have taken a joint home loan with my wife on joint residential property. but my wife is not paying the instalments and only i am paying the installments. can i take the full benefit of the interest and principle repaid. total repaid interest is less than 1.50 lac and i want to take the full benefit.
January 24, 2011 at 11:46 am
I am having a home loan for a flat purchase, which is under construction. it was suppose to be get occupied in dec 2010, but still it is under construction only, so it is not occupied, i do not have occupation letter from builder. I have bank statement (bank certificate) from a nationalize Bank, having all priciple amount (Rs. 178000.00) and interest amount (Rs. 80000.00) paid for this financial year.
Can we get tax benefit on this home loan ?
January 25, 2011 at 10:49 pm
hi
i have booked flat under constuction ,possession on feb 2012 ,on11 jan 2011 ,taken loan,started prepossession emi,so my question is will i get tax benifit for principle repayment for FY11-12 as passession in same year but principle repayment before possession?
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February 1, 2011 at 11:17 pm
Dear Mr.Krishna,
Really nice article. I have the following queries.
1. I have a flat in chennai on loan from LIC and it is rented out to my father in law. I am claiming “Loss from house property”.
2. I am planning to buy a house in bangalore(where i work) but i am staying in a rented accomodation with my mother. so my questions are:
a. can I claim loss from house property for the bangalore house whether rented out or not rented out(kept locked), apart from the chennai house.
3. I have a house in delhi(not on loan) but i have not got formal possession from the DDA and is locked.
What will be the position taking into account this(delhi) house also.
In nutshell, can i claim loss from house property for both the houses.
Regards
Srinivasan
b. Can I
February 4, 2011 at 5:29 am
I have taken loan of Rs.822138/- out of which Rs.57858/- is interest (u/s 23 &24) & Rs.57088/- as principal (unser section 80c) . If i make a prepayment of Rs.125000/-, under which section can i claim tax benefit.
Regards
February 23, 2011 at 4:31 am
hi
I m going to buy a house which was aleready bought by a my coleouge in past.
My question is that can i get the tax benifit of the stamp duty and registration fees payment for the same.
Please suggest in this condition.
Naresh
February 24, 2011 at 3:03 am
Dear Sir,
I request you to Please give answer to my below doubt in my email id.
I have purchased a flat in 05/05/2008 and sold the same in 12/10/2010 (STCG), Can I get the benefit of Interest paid on Hsg.Loan of Rs.1,50,000/- and Principal amount of Rs.1,00,000/- as u/s 80c in the Current year i.e A.Y 2011-12. And also I given to my agent Rs.1 lakh as brokerage and I had some interal repair work in 2009 cost approximately of 1,50,000/- Can I claim the both amounts against the Short Term Capital Gain. Sir Please give answer.
February 26, 2011 at 12:22 am
I HAVE TAKEN FLAT IN BHIWADI IN THE NAME OF MY WIFE(AS SHE IS HOUSE WIFE) AND I AM THE BORROWER AND SHE IS CO-BORROWER.
1. CAN I TAKE TAX BENIFIT OF HOUSING LOAN
2. CAN I TAKE HOUE RENT ALLOWENCE AS I AM GIVING HOUSE RENT.
3. MY FLAT AND DISTANCE BETWEEN THE HOUSE FOR WHICH I AM GIVING RENT SHOULD BE 25 KM ( IS ANY LAW).
February 26, 2011 at 11:10 am
I am paying housing loan in my father’s name, can I get a certificate from the bank that I am paying the EMIs and possible to get a tax exemption????? Please advise..
February 27, 2011 at 11:24 pm
Hi,
I have purchase home in the name of wife (House Wife) and EMI paid by me.
Am i eligible for tax benifit if yes pls help me to get the Section etc.. (Legal authontication)
Thanks & Regards,
Virendra
March 1, 2011 at 2:28 am
How much I can invest in PPF to get 80c claim
March 1, 2011 at 8:37 am
I have booked 2 flats in Noida in the name of my wife. For those 2 flats I have taken loan under my name. My wife is a house wife. At present I am employed abroad, so I am paying tax for that country. But in future if I get a job back in India, can then I claim for tax benefits? since home is booked just on my wife’s name though loan is on my name ? Property is presently under construction.
Thanks & Regards,
Ashutosh
March 5, 2011 at 9:19 am
I have one flat in Bangalore which is self occupied. I have taken a home loan and repaying about Rs 65000 per annum as interest and am claiming the IT benefit.
I recently bought another flat in Mumbai with home loan and presently on rent since Nov 10. I am paying an annual interest of approx Rs 2,10,000 for the loan taken.
Please clarify my total tax benefit in both the above cases.
Thanks
jothi
March 5, 2011 at 9:22 am
Hi,
If I buy a house jointly with my wife and take a joint home loan, can we claim income tax deduction individually; and how much we claim income tax deduction individually?
March 17, 2011 at 2:25 am
I have a flat in gurgaon which is on rent and no interest rebate is applicable/claimed rent income is being declared. Second house at mohali which is kept for self use due to servicse is residing at patiala in co accomodation against rent payment.
Elegibility for interest rebate be confirmed.No hra is being received
please advise
March 19, 2011 at 9:16 am
Ten years back I have availed housing loan from my employer of Rs.400000/- at 5 per cent simple interest up to 105000/. And rest on 9 per cent simple interest. My principal loan amount of Rs.400000/.is repaid up to March,2010 monthly. But the interest amount of Rs.196000/- is still outstanding on which no interest will be charged only the monthly installment will be credit. Please inform me that whether this outstanding interest amount will attract the perquisites value.
March 24, 2011 at 12:44 am
Dear Sir,
One of my friends stay in Government quarter. He has a flat very close to it. The two are close to the office.
He does not have to pay for the govt quarter as well. The flat is complete & he is not going to leave the quarter.
Can he show the flat as self occupied and enjoy the benefit of direct deduct of interest under 24B of IT act. He does not receive HRA.
Looking forward to hear from you
Sudhir
March 31, 2011 at 2:44 am
I have self occpained house and caliming housing loan for tax benifits.
Meanwhile i have purchased one more house at my village through housing loan.The EMI is (23000/month) is very high and rentals are very low (2000/month).Is it possible to show it loss on propery for the intrest paid to calim IT examption.
April 21, 2011 at 6:22 pm
I have two housing loans. One Joint loan with my father at my native and one loan at Bangalore for under construction Apartment. My parents are staying in constructed house at native.
1) How can i avail Tax exemption for house at native occupied by my parents ? Should i show nominal Rent as income and show the interest paid under section 24 ?
2) Apartment at Bangalore -I will get possession by Nov 2011. How can i avail tax benefit ? My understanding is to declare the Interest paid from Nov 2011 to March 2012 + (Under construction Interest paid /5) and claim HRA from April 2011 to Oct 2011. Please confirm.
3) Any restrictions to avail Tax exemption on 2 or more housing loans?
May 10, 2011 at 3:08 am
I had a housing loan from 2003 and was claimming benefit for that. The same loan was cloased in March 2011. I availed another loan in April 2011 for another property in another city. Can I claim the benefit for second loan as usual . The first house is occupied by my parents. Please confirm
May 29, 2011 at 11:42 pm
hi,
Is there is any limitation for the number of house loans we can get tax rebate.
I have already 2 houses for both house i got a house loan and also repaid completely. For both the houses i got tax benifits. (In the last 5 years)
If in case purchase one more house now in loan whether i can get tax benifits?
Please respond . Thanks
dvu
June 11, 2011 at 6:21 am
Sir,
I have purchsed an independent house in 2006 in Jaipur. The house was purchsed in the joint name with my wife. we both are regularly claiming IT exemtion as per rules. Now we intend to purchse a flat in Jaipur due to the reasons that my wife’s office is about 28 KM from the present house. Can we claim the tax benefit of interest and principal amount to be repaid for both the house loan. Kindly suggest the best way to get the maximum benefit.
K K GUPTA, Jaipur
June 27, 2011 at 1:09 am
Presently I am working at Deharadun, and recently taken home loan, this is second home, first loan is at Bhubaneswar, which is given as rent, so whether I will get benefit for income tax in both home loan. Second property is purchased in my wife’s name, who is house wife.
June 30, 2011 at 1:23 pm
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July 1, 2011 at 2:41 am
I have taken a home loan for construction in my home town, for which i have been claiming tax exemption (self occupied property). Now, I intend to take another home loan for construction in my place of work and also intend to claim tax benefits upon its completion.
Can i continue to claim tax exemption on both home loans as self occupied? The house in my home town is not rented, but occupied by my parents.
July 5, 2011 at 10:52 pm
Hi Krishna,
Thanks for the article. I would Like to know few things
1) I currently have a home loan in my name in Mumbai on which I am paying interest around 7000 p.a.
2) I am planning to buy a property in Jaipur.
3) I am confused whether I should buy the property in my name or my wife’s name? My wife is home maker and has no income but i can pay it from my account. What are the benefits I would receive if I buy it her name OR if i buy it in my name? CAN U PLS SUGGEST
July 6, 2011 at 11:20 am
Hi,
I have a question, if housing loan is taken by husband and wife in the income tax certificate shows both names first of wife and second name of husband. The interest amounts to Rs. 2.80 Lacs. Can both of the take income tax benefit of 50% sharing viz., Rs. 1.40 lacs each (interest) and subsequently 50% of principal amount?
July 9, 2011 at 3:14 am
One of my friend has purchased the property in nov.2006. He has started paying loan insttalement. He has claimed the rebate of interest & repayment of housing loan. But in the month of sept, 2009 he come to know that still the paper possession is not the real possession. Till you get the physical possession of the house you are not entitled to claim the interest. He start not claiming the interest from that f.y. onward. But he is feeling gilty. how I pay the tax on the amount I have already claim. Kindly advise
July 12, 2011 at 12:45 am
hi
i have a query on home loan. can someone please respond / reply my query.
Thanks in advance….
If I am purchasing a property. Sellers are joint holders in property. they have requested me to pay amount to them in 50/50 % to each holder’s name.
as well they have also requested that BANK Homeloan disbursment should also happen – to both the holders in 50-50% ratio.
is this possible ? can my homeloan provider bank do this ?
if I do payment to both the party due to purchase of properties , will this have any impact on my books of accounts. can I do this ?
Kindly provide respond to my above queries…
Note : – both parties are joint holder and their names appearing in property agreement.
Thanks
Ritesh Shah
July 15, 2011 at 2:11 am
I have a doubt. I am staying in a rented house. Recently I took a housing loan to buy an apartment. Though the construction is not complete the bank started the EMI. I can occupy the apartment only in March 2012. Can I simultaneously get HRA exemption and exemption of interest paid on my housing loan for tax benefit?
July 16, 2011 at 7:25 am
Sir, I would like to know how do i get max tax benefit if i get the possession after 3 years of taking the loan. Thanks
July 21, 2011 at 11:15 am
I and my wife have taken a home loan jointly.We would like to share the interest component 50% each.The deduction of EMI started from May 1, 2011 from my account.I’m yet to apply to my bank to make my existing account as joint a/c along with my wife.Almost 4 EMI’s will go from my account before it becomes a joint account. After the account becomes a joint a/c, can my wife transfer her share of the EMI for the first four months to the joint a/c so that her individual contribution remains 50%.
1.Can we still individually claim interest exemption for 50% ?
2.Is it necessary that the principal amount shall also be apportioned in the same way as that of Interest amount
Please help
August 5, 2011 at 5:19 am
Hi,
I bought one house on loan in 2005 and for that I claimed the rebate on tax also. Recently I repaid the loan.
I also bought another house in 2011 on loan and currently I am availing the tax rebate for both principal and interest components.
I am planning to buy third house on loan. Just wanted to know whether I can claim rebate on third loan or not?
Thanks,
August 9, 2011 at 9:51 pm
Hi Krishna,
Pretty informative article. I have the following question though
1. I purchased an apartment in Dec 2007. Loan was sanctioned and disbursed in Dec 2007.
2. Registered the apartment in Jan 2011.
3. Recieved Possession of the apartment in July 2011.
Can I get complete tax benefits given the clause that the contruction of the property should be complete within 3 financial years after the loan disbursement date? If I consider registration date I am within 3 years but if I consider posession date I am not.
Please clarify. Thanks in advance.
Regards,
Ashish
August 29, 2011 at 1:44 pm
Hello Krishna,
I am having home loan of 1500000 ( currently its at 1300000) I am planing to repay all the homeloan after this i would like to buy a house in my hometown, can i get tax benifits on second home?
Could you please explain ?
Thank you,
Sandeeo
August 29, 2011 at 10:34 pm
Hi Krishna,
Your article Home Loans and Income Tax benefits was very informative. But it is not clear to me what tax benefit can I take in my case. I have taken home loan of Rs. 1000000 this year 2011 for construction of my house in my home town. And I am currently working and staying in Delhi in a rented house. Construction will be completed by 2012. Can I claim any deduction in current year (2011) on the Interest payable or the principal amount when my house is under construction?
September 9, 2011 at 11:36 pm
Hi Krishna I have the following query:
I booked a flat in 2009 Nov making the initial payment from my own funds.
In Feb 2010 started the disbursements.
The Interst paid in FY 2010-2011 was Rs 1,20,000.
The Interest for FY 2011-2012 was Rs 3,10,000
I will get the possession in Jan 2012 and Rent it out from Feb 2012 at Rs 20,000 Per month
Income for 2012 will therefore be Rs 28000 ( Rs 40000 – Rs 12000)
What is the tax exemption I can claim for the FY 2011-12.
Regards,
Rajneesh
September 10, 2011 at 7:46 pm
Sir, I have the following query.
My wife and I live in Hyderabad in a SOP that is in my name.
My wife has acquired a property in Kerala, which is in her name.
Can she show the Kerala property as SOP, unoccupied, in her tax returns?
Would this unoccupied SOP in Kerala in my wife’s name attract tax or can it be treated as SOP, which is unoccupied, because she is living with her family in another city?
Would appreciate if you can help clarify this?
Thanks
September 21, 2011 at 12:04 am
hi krishna,
My ques is if i am a coborrower of a housing loan and if i have not rented my share of house than can i claim 150000 deductions for interest and other borrower rest of the amount as there portion is rented out?
September 25, 2011 at 9:55 pm
hi,
House is registered in the name of my father and also loan is his name. if i pay the loan will i get benefit of it?
Thanks
September 26, 2011 at 5:03 am
Hi Krishna,
Can you pleaese clear my doubt? I am really confused.
I have a flat in Gurgaon and that is under construction. Load amount sanctioned is 20Lac, but as of now i have taken only 3lac and i am paying interest (no emi as of now) on that around 2.5k per month. Can i have any tax benifit on that?
Secondly I am planning to but 1BHK apartment and for that also i will be taking around 14Lac of loan. Can i have tax benifit on that?
I know this is the case of having two houses, but if first one is under construction i can’t give that on rent, but still would i need to show that as rented out flat? If i will need to show that flat as rented out flat then how much income I will need to show from that flat while in actual that is still under construction?
And lets say after few months I get the possession of my first flat also and i start paying the EMI. Now i am paying two EMIs. One is for 15K and other for 23K. How much tax benifit i can avail?
15K * 12 = 180K (150K interest and 30K principal)
According to rule i can make 1.5 lacs of my income non taxable as payment towards tax and remaining 30K of income as non taxable towards principal payment. How can i avail tax benifit from emi of second flat which is 23K per month?
If i am confusing you then I am sorry.
Regards,
Deepak
October 10, 2011 at 5:02 am
Hi,
You have talked about ITax benefit on more than one property. But what about wealth tax to be paid if you have more than one property and wealth more than 30Lakh. Could you please elaborate on how one should go about the concept of wealth Tax applicable on 2nd property.
Regards
Satish
October 17, 2011 at 2:24 am
i had taken a home loan on my name and done the registry on my wife name,
1 can i take a TAX benefits of lone interest AND HRA Both
2 if there is any time limit to get this kindly of benefit may be 01year or 02 year, per say house is under furnishing condition.