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
I have taken the home loan from LIC housing finance where the land is in name my father. I used to honor the EMI to bank from salary account where my father is not claiming the any benefit from Section 24B Income Tax Benefit of a Housing Loan. In circumstance I can avail this tax benefit under Section 24B Income Tax Benefit of a Housing Loan.
Looking forward for your reply as earliest possible.
Regards
Manish Singh
08588813792
Sir I have purchased a flat on my wife name and paying emi of lone from my salary can I get tax benefit
One of my clients is selling his flat; he has an allotment letter of this flat from the developer dated in Sep 2011, the house was under construction and so his sale deed was executed in July 2012. Kindly help us that which date will be applicable for considering long term capital gains, will it be from the date of allotment letter or from the date of sale deed?
Hi,
I Have purchased home and gifted that home to my brother.. But remaining EMI amount my brother given to me on monthly basis. EMI is still my bank account only. I would like to purchase another House. Whether I am eligible for taking a home loan again?
I was allotted residential plot secret 3 greater NOIDA in the year2009 and payment made by taking housing loan from llichf and paying EMIs regularly. The possession of the plot has not been handed over due to dispute farmers with Gnoida authority. Now I want to claim tax rebate on salary account Delhi police but ddo has refused to give benefit. Is I entitled. Pl intimate.
Sir,
I had acquired a fully finished house from the state housing authority for which i took a loan (2009) from my office (Central Gov) and have been claiming the interest on accrual basis. Now, i am planning to construct the second floor of the house for renting for which i have to take second loan from bank.
can i get rebate of interest amounting Rs. 200000/ in aggregate on both loans ?
further i have to state that i did not claim the deduction of principal on the first loan and i am presently residing in the Govt accommodation and my house is unoccupied.
please advise.
Nice and informative article. Keep up the good work in financial literacy.
Now with 2 lakhs deduction under section 24, it will be attractive for many home buyers. Hope of a reduction interest rate from this year also can revive the real estate sector.
purchased 2 (small) flats @12,50,000/-each in june 2012 with home loan of 10,00,000/- each. claimed 80C(principal, stamp duty) and section 24(interest) for both as self occupied and deem-let-out during last 2 years.
Again purchased a (large) flat @35,00,000/- in july 2014 with home loan of 26,00,000/-; but before that i have fully repaid and closed earlier 2 home loans (then only got new loan).
Then, sold 1 (small) flat @15,50,000/- in Dec.2014; and panning to sale another (small) flat.
(To save extra capital gain tax, wish to sale second small flat only after March 2015; is it OK?).
Pl suggest how to calculate capital gain(STCG)??? Also, tax calculation regarding reversal of 80C and/or 24 (principal, stamp duty and interest).
Hii,
sir, I have taken housing loan as on 15th June 2013 and my property was in underconstruction till September 13 (possession date- 10/09/13) so what is the taxability for preconstruction interest from june to sept for f.y 13-14 ?
Here is my situation.
The flat I own was previously owned by my Blood Brother. He got the flat transferred to me as gift, but the loan still remains under his name. We had a mutual agreement that I will pay the EMI, hence on a monthly basis I pay my brother, and eventually the EMI gets debited from my brothers account.
My brother is not claiming this for tax benefit as the money at the end is paid by me. I want to know if I can claim this for Tax, since I am paying the loan indirectly. Please advise.
Your brother can relinquish part of the property by Registering the deed. You can legally claim exemptions.
Vijay
Sir, I have completed my house loan & now i am planning to take a flat in other city….can i will get income tax benefits or not.
I am a school teacher and have house building loan. I have no income from other sources. Which form I will fill up for income tax return for the assessment yr 14-15?
Sir
I want to sell my current house after buying the new house.I then want to repay the home loan of the new house by the money I get from selling the old House.
1.What is the max. time in which I can sell my old house after buying the new house ,so that I get IT rebates?
2.Which is the best thing for me to do in the above case?
Regards
Prabhat Sinha
Hi,
I have taken a home loan for a flat. I got the possession of the flat in August 2014. However, the builder has not issued Possession Letter yet. I have to submit documents to my company to claim benefit of Interest paid on the loan. I want to know, whether Possession Letter is required to claim Interest on the loan.
The builder’s argument is ‘the date of possession is specified in the sales deed. Hence, it does not require separate Possession Letter to be issued’.
Kindly let me know what can be done in this situation. Is there any other document that can be provided to claim Interest on the loan?
Dear Sir,
I have a question on income tax rebate on home loan.
We have purchased a house and the same is in my and my mother’s name.
I have taken a loan of 35L and is being totally repaid by me thru a joint account in the same bank. My mother do not avail any tax benefit on this though she has some income thru shares and also files ITR.My question is , can I avail the full benefit of income tax and the share will be divided between me and my mother.
Please note she has nothing do to with the loan amount and entire EMI is being borne by me.
one property cost is 55 lakhs and for purchasing in the same property I wants to take a Home loan of Rs. 40 Lakhs now the bank is diducting Rs. 55 000/- as income tax for give loan of Rs. 40 lakhs. is it right or wrong.
Randhir,
There is no income tax on loan. Kindly check again what is being deducted…
Hi,
Can you please guide me on tax exemption on second property costing more than INR 50 Lakhs where loan amount is INR 40 Lakhs? My first property is self occupied and free from any loan.
Amol,
You will get tax deduction as per sec 24. You can claim upto Rs 2 lakh on interest and Rs 1 lakh on principal in this financial year.
I have taken a loan of rs. 340000/ from my employer.My employer add Rs. 9000/- as perquisite in my income for the subsidy of less intt. charged.
My deduction for intt u/s 24 is Rs 10000/-
Principal 80 c-9500-
Can perquisite of Rs.9000/- can also be added in section 24. \
Please reply and if yes under which section.
Sanjay,
Sec 24 includes specifically the interest you repay on housing loan. Perquisites by your employer cannot be included in this section.
Hello,
Have closed my home loan for first house and now in process of buying second home. Would like to know if I can claim unlimited tax benefits on home loan interest? Is it mandatory to have tow home loans running to get this tax exemption? Or tow owned home with one home loan closed and other home loan running is enough?
Please guide.
Cheers!
Ajit,
Unlimited interest deduction in housing loan is for the second loan when the first housing loan is running.
Renganathan K.
1. In under construction property the interest you repay during the construction period can only be claimed in 5 equal installments in 5 years from the date of completion of house. You do not get any exemption on the principal you would have repaid in the construction period.
2. Yes there is a clause in income tax that the construction of house should get completed in three years. In case if get delayed beyond this period than the exemption on interest you can claim is reduced to Rs 30000.
3. The completion date will be calculated from the first loan but need to get completed within three years irrespective of any future loan you avail on the property.
I hope this answers your query to an extent. Its wiser to seek advice from a good tax expert before you claim for the exemption.
We are Govt. Servants,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 8.3.2014. 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 tax rebate on the interest component 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.