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 a Housing loan of 4000000 for construction of my house for 5 years.i have taken the loan on 05/06/2012 ,am i liable to get tax benefit of 150000 every year till my loan remain as payable ……will i get the deduction of 150000 for 5 years…?
Mavila,
The deduction of R 1.5 lakh is available when your house gets constructed.Any repayment during preconstruction period can be claimed in 5 equal installment when the construction gets completed.However, this benefit is within limit of R 1.5 lakh.
Do you have article, how Pre-EMI has to be included in the tax benefit ? Is that something, after construction is over or even before(pre-EMI) has to be claimed. I know, vaguely, it is divided into five equal installments of five financial years. When does it starts ? After the hand-over of home(in that financial year)
Sunder,
Tax benefit starts when you have got the possession of your house.
sir,
Our house is in my dad’s ownership, rules of area are he can not sell or lease for 10 years, now its 6th year. We want to construct first floor, I am working, and want to take loan and claim tax exemption, kindly suggest me what can be done?
Thanking you
Is there no tax deduction on loan taken for acquiring land?
No
URGENT- The house is owned by the father, the housing loan is given in the joint names of father and son considering the income of the son. The son repays the loan. Whether tax benefit can be given to the son eventhough the house is not owned by him but housing loan is opened in the joint names of father and son
Sandhya Someshwar
Sandhya,
No, if the property is not in the name of the son then the assessing officer may not allow the tax benefit as one need to be owner or co-owner in the property.
Allotted flat in December 2006. Construction completed and possession in August 2012. Can I claim tax benfits for the interest on housing loan for the pre construction and post completion period now ? If so what are the limits?
Devarajan,
Yes interest during pre-construction period can be claimed in five equal annual installments once you get the posession.However, it will be under the limit of Rs 1.5 lakh only.
Thank You for the reply. Please note that the first installment of Home loan was taken in December-2006 and last installment in 2010. Period of completion is about six years from first installment and two years from the last installment of home loan. I propose to rent out the home. Please advise accordingly for this type of situation.
can i get the claim for whole of the interest.
i am 3/4th share holder of the property. but i am the only one who is repaying the loan as well as the interest on the same. i get the claim of whole of the interest on this housing loan.
Rajan,
Yes you can claim interest by taking declaration from other holders that they are not claiming any tax benefit.
Sir,
The plot is in my wife’s name and I took a home loan and repaying the EMI. My wife is co-applicant in this home loan. My wife is filing ITR for other sources income only.
Will I get the full Housing Interest Rebate on this house even I don’t have ownership/joint ownership in this house.
Ramesh,
You do not get home loan benefits on buying a plot.Its only the house on which you can claim tax benefits.
Agreed Sir,
I purchased the Plot in my wife’s name but from my income and took home loan from bank for construction. EMI is also paying by me only.
Further my wife is filing ITR for Other Sources income and doesn’t have any other income.
Whether I am eligible for the Rebate of Housing Loan interest, in view of clubbing of income.
Ramesh,
Clubbing of income does not apply in home loan. If property is not on your name then its difficult to claim any tax benefit.You need to be a co-owner in it.
dear Sir,
i donot have the income tax return copies so can i get the home loan still.
my salary is 27k.
kindly advise.
thanks & Regards.
Devendra
Thanks Jitendra for the answer.
I have received a proper certificate from my relative about the interest that i have paid to him. So now i am eligible for tax benefit? Please suggest
Regards,
Rahul jain
I don’t think so. Loan from financial firms (That too only home loans) will be considered for tax rebate. Loan taken from individuals will not count.
Rahul,
Yes you are eligible for the interest you are repaying. As said earlier you cannot clam section 80C under this.
Hi Jitendra,
Do you mean, interest paid on any loan is eligible for IT rebate under 24B? This was my question actually. I have a land loan for which I cannot claim 80C rebate. I am thinking whether it is possible to claim 24B for interest paid!! You have mentioned above that certificate from relative is sufficient for claiming 24B tax rebate. Then I hope it should also allow for other loans – like Personal loan etc. Please clarify.
Regards,
Sudhindra
Sudhindra,
Under section 24 you claim deduction on home loan taken from relatives also.However only the interest is eligible as section 80C is only from a specified institution.
Since, there are no tax benefits provisions on personal loans so you cannot claim it from anywhere.
Section 24B is actually dead investment. As per my knowledge, you can even mention loss in share trade in that section. However, I have a question. I have a land loan for which 80c is not applicable. Can I get 24B exemption on this?
sir i have two hosing loan from two different bank on same property,kindly tell me can i claim the benefit of 80c on both housing loans
How did you get that? Its illegal to have loan from two banks for the same property. You actually need to submit all property papers to the Bank from which you borrow loan. Obviously, if you take loan from two banks, both the banks will not be able to have all your property papers. Bank obviously will not disburse loan amount unless they have the papers.
sir,
the loan gien by second bank is on the guarantee of first bank.
Ankit,
Are these two loans of same amount for full value of property?
In case I am buying a second home ,which i do not plan to rent out. How is the deemed rent calculated? Is there a ready reckoner?
For illustrative purpose, lets say I buy a second home which costs 10LAC and the annal interest on it is 120,000.00. Can i say that the rent income from this property is inr 30,000 per year (at 3% yields as are currently prevalent)?
Thank you,
Akshay,
Generally, the rent is calculated on the basis of annual rental value fixed by the local Municipal authority on basis of which they charge municipal/house taxes. However, if there is a Rent Control act and a standard rent is fixed for any location, then this become the maximum rent one can charge and so will be considered while computing deemed rent.
There is no defined formula and you need to get information on these two aspects.
Dear Mr. Solanki,
My dad and I jointly own the house and we have jointly opted the home loan. I pay EMI thro’ my account and have submitted NOC (that my dad is not availing any tax benefit from the said property) to my employer. They have considered my entire contribution and same is getting reflected in my Form 16 as well.
For AY 2012-13 when I am filling ITR2, there is a field which asks whether House Property is co-owned? and how much is the contribution? I cannot put 100% contribution in my name, since it is not allowing me. If I put 80:20, still the tax calculation doesn’t change, because I am putting the exact information as per Form 16. Please do let me know, if I am mistaking any bit here?
Thanks in anticipation,
Ankush
Hi Ankush,
Haven’t gone through this information.
Give me a day or two, will reply to your query
Sure, Thaks.
Sir, any further update on my query?
Sir, please respond.
Ankush,
I am still not able to get the query resolved.I have to consult a CA on this matter.Will ensure i reply your query by EOD.
Thanks a ton! Much appreciate this.
If you can answer this as well please?
Is there any provision of tax saving on the second home-loan, where the property is under construction. Also, the first home-loan is still outstanding.
Thanks,
Ankush Jain
Dear Sir,
my friend is staying in one house with parents. He booked another house which he will get possession in next 2 years. Now he want to book another house which he will be getting in
next 6 months. Whether we will get benifit for 3rd house ? if Yes , How ?
Regards
Pravin D
Contrary to popular opinion, there is no overall restriction of Rs. 1, 50,000 on the interest payable on a loan taken to acquire/construct a house property or in respect of more than one property. In fact, this deduction is available for any number of properties and is without any limit under specific circumstances.
The calculation of income from house property (which means the rent you earn) has to be done separately for each property owned by a person. Home loan repayments are eligible for deduction for each such property.
Dear Mr. Solanki
sir, i am not getting a single benefit, because the home is in my wife’s name and when we are staying in same room, so HRA is not eligible. my question is that if we will shift to other rented room, whether i will get HRA facility and my wife will do return file, what ever rent she will receive.
And second thing, the home loan is in my name, the bank statement is coming in my name, only registration is done in my wife’s name.
third is what is the process of co-occupier, in co-occupier, can i get tax benefit?
Mania,
Its difficult to get a tax benefit when property is in somebody else name and loan is in your name.If you have made yourself a co-owner during registration of property then you would have availed the benefit.
If you shift to a rented house, you can claim HRA benefit even if you are paying a housing loan.
I co-own a house with my parents but there is no loan. The house has been bought free and clear.
If I buy a second house on loan, would I be eligible to rent it out (really or nominally) and claim rebate on the full interest of the home loan?
Thanks,
Aditya
Aditya,
Yes on second property you can claim the full interest amount for deduction.
Thanks for the prompt reply.
Aditya
Hi,
I and my Husband are co -owners and he is the co – applicant of homeloan taken recently.
The EMI will start from next month and EMI will go from my account and he will transfer 50% of the EMI amount to my account every month. In this case can he claim tax benefit upto 50% of the contribution or should he be the joint account holder of the account from which EMI goes out.
Shakuntala,
Wiser choice would be to either have a joint account as transferring funds does not make you eligible for tax benefit.
I have only one house and that is let out, so can i eligible for interst deduction for more than Rs. 1,50,000/-
Sumit,
On first house you can claim only upto Rs 1.5 lakh.
Hi Jitendra,
I had read the sec 24 wording but it not specifically written.
Can you throw some light on it?
Thanks
Sumit,
If your property is let out then you can very well claim deduction on interest repayment without any limit. i.e. there is no limit on interest deduction for let out properties.However, your rental income will be taxable.