A house loan repayment has two components – principal and interest – and both of these components are treated differently for tax benefit calculation purposes.
The principal amount is covered under Section 80C and has a Rs. 1 lakh limit. In order to claim the tax benefit under 80C the house should already be constructed, and should be a residential property.
Section 24: Tax Benefit on the Interest On Home Loan
The interest on the home loan is treated differently, and Section 24 deals with the tax aspect of the interest on house loan repayment.
The maximum limit under this section is Rs. 1,50,000 and you don’t have to actually live in the house to claim this benefit.
The interest payment is deducted from your taxable income and thus reduces your tax liability. There is no limit on the number of houses you can claim this as well as the location of the houses. The only limit is Rs. 1,50,000 on the whole amount.
There are special conditions like when you get the loan disbursed before the construction of the house and pre – EMI interest and Raag has covered these aspects in a lot of detail in his post about tax benefits of a home loan which you can read if you were interested in those details.
Correction: An earlier version of the article stated that the 80C deduction is only available if you are living in the house. CA Karan Batra notified me that you don’t have to live in the house to claim deduction. Apologies for the mistake.Â
KINDLY THAT THE DATE OF COMPLETION OF HOUSE IS 8TH MARCH,2014. SORRY FOR THE WRONG ENTRY AS 3.8.2014
We booked a vacant plot on my name and my wife’s name(50:5o share)during the year 2009 forwhich I received SBI home loan Rs 12,00,000.00 on 8.10.2009. We applied for a plan permit and got the approval on 26.12.2011. We started our house construction in the same purchased plot and in the mid of construction, we applied for a home loan for a value of Rs 20,00,000.00.The first installment of home loan of Rs 15,00,000.00 was issued on 10.08.2013 and final installment of loan was issued during the month of April, 2014. The house construction was completed on 3.8.2014. We remitted the following details of Interest to SBI.
A) For a loan of Rs 12,00,000.00 (Date of Issue: 8.10.2009)
i) Pre-construction period interest
8.10.2009 to 31.3.2010 = Rs 45032
01.04.2010 to 31.3.2011 = Rs 91157
01.04.2011 to 31.3.2012 = Rs 90475
01.04.2013 to 31.3.2014 = Rs 96164
—————
Total Amt of Interest = Rs 4,08,732
—————-
ii) Post construction period interest
Projected interest (01.4.2014 to 31.3.2015) = Rs 89,734
B) For a loan of Rs 20,00,000.00 (Date of Issue: 10.8.2013)
i) Pre-construction period interest:
(10.8.2013 to 31.3.2014) = Rs 1,10,564.00
ii) Post construction period interest
Projected interest (01.4.2014 to 31.3.2015) =Rs 1,94,900.00
Since the house was not completed within three years from the date of issue of first loan( i.e. 8.10.2009), Whether
(i) I am eligible for a tax rebate of Rs ((50%*4,08,732)/5) +(50%*89,734.00) on the Rs 12,00,000 loan and
(ii) the pre-construction and post -construction interest on the second loan of Rs 20,00,000.00(issued on 10.8.2013) for a value of Rs ((50%*1,10,564)/5) +(50%*1,94,900.00) loan can be fully claimed.
Our house is self occupied. Under such scenario,
Our Queries are:
1) What exemption can we claim individually and under which all section {Sec 80 / Sec 24} and what amount?
2) As the final disbursement of loan falls during the month of April 2014,Is there a rule that construction MUST be competed in THREE Years, to claim full tax benefits from the date of first installment of loan? i.e (8.10.2009)
3) In order to avail full tax exemption of Rs 2,00,000.00, whether the constructed house is to be self occupied or to be let out.?
3) The construction is started after the first loan and the second home loan is also availed, how the completion date of construction is calculated? i.e from the date of first loan or from the date of 2nd loan?
Kindly advice.
I m having 2 different houses. One is constructed n I m living in the same house. It is almost 8 years passed n I m paying loan installments per month. 2 years back I had booked another flat which is still under construction n only 2 floors are ready out of 15 floors. But as slab wise payment terms I had to go for loan and till date I have paid 10% of the total amount through bank n my monthly emi has also started. In future I will have to pay amount as per floor completion through bank n accordingly my monthly emi amount will get increased.
My question is now that shall I declare both houses principle n interest amount under 80c as tax benefit to me. I m paying approx 2.5 lacs emi amount per year for both the houses.point is my second house is still under construction but I m paying emi per month n bank will be provide me statement for receive of this amount. Pls clarify.
Satish,
You do not get any tax exemption on principal amount for under construction property. You can only claim the interest paid that too after the completion of the house in next five years in five equal installments.
Sir ,
My brother in Law is an army officer . He has paid 1.40 lac pre EMI interest during 2006-2008 for house hegot from Army Welfare Housing Organisation . He got the certificate of this payment in April2014 . His parents are living the house as he is posted on LOC in Kashmir. Can he claim this amount in five instalments along with the regular interest he is paying subject to max limit of 1.50 lakh and in coming 4 years . He got the possesion of House in 2010 but this certificate recently . I think he has to use ITR1 to file his return .Can you guide him that where he will put up this deduction in ITR form 1 .
thanks
Ajay,
Yes you do get tax benefit on pre-EMI. It is the interest component and can be claimed similar to the housing loan interest within limit of Rs 1.5 lakh. So show it in under income from house property. If you are not aware take assistance of CA for filing your ITR.
Hello,
I have bought a plot on loan (purchase of plot loan from Indiabulls) in May 2014 but I have not constructed house on this plot yet. Hence without constructing house on plot, can I claim Tax exemption on Principal + Interest paid for plot loan repayment? .
Rakesh,
There is no exemption on loan taken for a plot.
i took a self employed professional loan from hdfc bank. using this loan i constructed a residential property over a land that is owned by my father and uncles. can i claim tax benefit under section 24.
Vikas,
There is no exemption on self employed professional loan for construction of house.
Hi,
I have paid Rs. 3,00000/- to the builder as a down payment of my flat.
Please let me know where can I put this amount in Income tax return form?
Note: My EMI is not started yet.
Jayesh,
You get exemption on the home loan not on the funds you have sourced unless it is coming from capital gains. Also even if it is a home loan you get exemption on the Interest you repay after the completion of your house.
Bought Home in Noida in CLP plan on 2010 & taken home
loan on 23-10-2010. Closed home loan account on 2013.
Didn’t took any home loan benefit before.
Builder has given possession certificate of 25th March 2014
My question :
Q1. Can I avail the home loan benefit (only interest part) from 2010-2014 which is equal to 1.45 lakh. If i sum up all years interest. If yes can i take it in one shot in this AY 2014-15 or can i claim the intrest only for this year or for this yr + 20% of remaning amount .
My Calculation
Total Intrest = 152424 (from 2010-2014)
-36443 (intrest for 2013-2014)
==========
113557 *20% = 22711 (20% of total remaing amount)
For AY 2014-15 can i claim ? 36443+22711 = 59154 in ITR1 ?
Q2. I guess i have to fill ITR1 in this case as i have only 1 house. By putting -ve value in self occupied property … ?
Thanks.
Amit,
Yes you can claim it but in 5 equal installments in next 5 years starting from FY 2014.
I and my wife have purchased a flat through Bank Loan. The flat is registered in my wife’s name. But the loan has been taken jointly.My wife is now a housewife and I am paying EMIs. Can I claim tax exemption as my office is denying informing me that the house is not registered in my name.
Avinash,
Yes. To claim tax benefit on housing loan you need to have some ownership in the property.
But you need to check this with a qualified tax expert as in other provisions like capital gains exemptions are provided if the new house on which claim is seeked is purchased in the name of spouse.
Hi,
how much income rebate I can get under section 24B , if builder delay the construction by more than 3 yrs. For example I take loan in April 2003 and start paying EMI from April 2003 itself, but flat is not in my possession till May 2008. so for FY 2008-09 how much rebate I can get.
Rajesh,
Till the house is under construction you cannot claim any tax rebate. Once it is completed then you can claim the total interest you have paid during underconstruction in 5 equal installments. But this exemption will be within limit of Rs 2 lakh (As per budget provision) under sec 24B.
I and my mother jointly name of property what so I got tax benefit
Anil,
Yes you get the tax benefit if you have even part ownership in it.
Where to mention the interest paid on Home loan in ITR-1 online form.
I my wife and my son has taken jointly home loan and paying 4.5 lakhs per year (Interest 2.5 & principle 2 lakhs) can we all use the entire repayment dividing equally or according to our requirement
Ratnakuamr,
The home loan benefit can be availed in the ratio of the housing loan availed. However, you will have to prove the repayment which can be done if its done from a joint account. Else only the account holder from whose account EMI is deducted will be able to avail the tax benefit.
Hi,
The property is in my mom’s name and she applied for a house loan and I am the guarantor for the loan. But I am the one who is repaying the EMI.
Please let me know whether i can get tax exemption for this.
PS: I am having one younger brother and one younger sister.
Gayu,
You cannot avail the tax exemption. For claiming any exemption you need to have an ownership in the property.
Is there something like providing power of attorney of the property is possible now to avail the tax exemption eventhough it is owned by my mother?
Gayu,
Housing Loan tax exemption cannot be availed on power of attorney. You need to have an ownership in the property. Gifting a share in teh property can be one viable option but it will involve certain cost such as stamp duty etc..Much also depends on your bank from where you have taken the loan.Take assistance from a tax expert.
I believe you are wrong in stating that only a total of 150000 can be claimed if you have multiple houses and have multiple housing loans.
As for Section 24 deduction, on your self occupied house you can take advantage of interest payments up to Rs.1,50,000. For the other property, you can claim actual interest repaid, there is no limit for the same. In some places it is mentioned as a max of 250000.
Request you to check the same and come back with the correct information.
what effect if two house & interest 4,00,000rs.
1st for self occupied
2nd for rent
Myself and my younger son have taken a joint HL from SBI for Rs.25 Lacs. and the flat is in our joint names. The possession of the flat has been taken on 01 11 2013. But the same has not been occupied so far due to some furnishing work which is under progress. I was staying in a rented house from 1 04 2013 till 31 10 2014 paying monthly rent @Rs.15000/-. I am staying with my elder son from 01 11 2013 and not paying him any rent. My share of HL interest liability works out to be about Rs. one lac.
Please let me know whether my employer will pass on the HRA benefit on the basis of rent paid receipts from 01 04 2013 to 31 10 2013 and also recokn deduction of Rs.1 lac of my share of HL interest payable to the bank, while calculating Income Tax Liability.
PSNayak,
HRA benefit and Interest Deduction, both can be claimed.
Me and my wife owned a flat for which we have taken a home loan amt. 1975000/- with EMI-22969/- PM
Can we both take tax benefit for the intrest and principle amount?
Is it necessary that the EMI should be deducted from boths accounts?
Pradeep,
For banks you have to give them a single cheque. But for income tax claim the bifurcation is must. In a joint loan you can claim the tax benefit in the share of the loan borrowed by each. An ideal solution is to repay from a joint account and have a written document mentioning the bifurcation clearly. You can get this done as an agreement. Through this process you both will be able to claim the tax benefit for your share.
written document mentioning the bifurcation clearly- Sir please elaborate this line more.
Hi
I took a home loan jointly with my Father. I am the co-borrower & my father is the borrower. I am the one who is paying monthly EMI from my salary. Our employer is requesting for Co-borrower share in the property i.e; name has to be mentioned in the agreement with the shares. But my name is no where cited in the agreement. How do I need to claim for my tax ememption under 80C? If I give the self declaration then it would suffice.. Please confirm
Regards
karthik
9900014571
Sir,
I am a lady .I have bought second home under housing loan . It is not rented Iam paying EMI for both homes.How should I calculate the tax exemption regarding it