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 and my wife are joint owners of the land and taken a joint house loan from SBI. But the EMI repayment is done fully by me. She is also salaried, but she is not claiming income tax benefit out of this loan. Please let me know whether I can claim full tax benefit out of the interest and principal repayment?
Mr.Mansoor,
Yes, you can claim the fill exemption.Your wife will have to give a declaration in writing that she is not claiming any tax benefit.
Dear Sir,
My wife & my self jointly got an apartment from by a will executed by my deceased father-in-law. We want to sell it and purchase another apartment in the name of my wife. Extra amount needed for new purchase shall be obtained by a Bank/ LIC loan. I shall be the co-applicant and I will repay the loan as my wife is not working. I already own 2 houses in my name and paying EMI for the same. I am an IT asessee and my wife is not, being a house wife. My question is :
1. Whether any capital gains tax is liable to be paid for sale of the house ( either by myself or my wife) .
2. Whether any tax benefit can be availed for the proposed new house ( in the name of my wife) .
Mr>ramana,
Yes, the capital gains arises in case of inheritence also.The cost of acquisition in this case will be taken as the cost at which your father-in-law purchased it.
2.If house is in your wife name you cannot claim exemption unless you are a co-owner in the property.
Dear Sir,
is offer letter from builder for taking possession of house is sufficent for claiming home loan interest benefit or the date of actual possesion of the house is material to commence the benefit of home loan interest ?
Yatinder,
The actual date of possession is important to claim the tax benefit on housing loan.
Hi
I have received the form 16 from the employer and missed to delcalre the interest on house loan amount. While filing in the IT returns, is it possible to add the interest amount so that my net taxable income reduces? I didnt find a Section 24 (which is for the interest towards the home loan) in the IT return form.
Please help.
Thanks in advance.
Subrat
Subrat,
Yes you can do it.It is calculated under section “Income from house property” .
I have taken a housing loan and brought a house and I am living in the same. The housing loan was closed as of last year. I am planning to buy another house in the same city where I have the first house , what are benefits of loan now. My first is obviously comes under self occupied. The second will be rented out. How do i go about declaring this houses in IT.
You advise/suggestion would be highly appreciated.
-Suresh
Suresh,
You can claim tax exemption on loan taken for second house without any limit.The rent received will be included in your income on which you can claim a standard deduction of 30%.
Hi there, If I buy home but still continues to stay in the rented flat, do i get benefits of both ? ie. deduction of 150,000 (interest component) from my taxable income AND at the same time, HRA benefits (house rent allowance) ? Thanks, Jignesh
Shah,
Yes you can claim but there are some conditions attached to this which you need to factor in before claiming for any exemption.
Hi,
I have taken a home loan. The property is in my name. Now can I add my wife as co-applicant and get the home loan transferred. The property is in my name only. Do I have to do something to change the property under both of our names.
Please do help me..
Thanks & Regards,
Senthil
Senthil,
Consult a lawyer in this matter who will be able to gudie you more wisely.
Hi ,
I have got married recently and my wife have already bought a apartment with her name in home loan.
She is salaried when purchased the apartment and started claiming the home loan in tax benefits . But she is now planning to quit the job, in this case can i claim the home loan for tax benefits ?
If no is the answer . Are there any suggestions how to claim the tax benefits in my name for home loan.
Home loan details :
Tenure – 15 years ( 2years already completed in repaying EMI)
we are already in possession in the apartment .
Home loan in my wife name .
Rajesh,
you can claim the tax benefit if you are co-owner in the property and jointly taken the loan.
Sir I am paying Income tax on a income of 4 Lakhs after LIC, Ifra bonds, Mediclaim & NPS and I have a housing loan 15 Lakhs paying interest around 2lakhs per year kindly calculate my taxable amount after deduction.
You will have to approach a CA for doing that – there are far too many variables involved in that and it can’t be calculated like this on the comments section of a blog.
Jitendra,
I am confused a bit in e filing the TAX. I have Home loan and got possession now want to get rebate on the interest. Now which sheet should I fill ITR1 or ITR2. ow if it ITR1 then where should I specify the amount over to which I want to file rebate.
Regards,
Prashant
Prashant,
For getting the house loan exemption income from house property need to be calculated.
Consult a CA.
Thanks for your reply. I am staying in house property owned in my name which i have let out to my company and getting self-lease every month. For this property balance loan amount was paid in Jan 2012. Recently i have purchased another ready built flat with my spouse as joint owner. which shall be let out on rent. The approx yearly interest component paid on home loan is 4.5 lakh.
1. Wherther 1.5lakh limit is still applicable for both of us or total yearly interest(4.5lakh) shall be divided b/w us in proportion of ownership.
2. Income/loss from house property shall be calculated considering both properties.
3. Please provide any ready-calculation/ article for calculating house income.
dear sir,
ur reply is awaited..
regrds
sumit mishra
sir,we purchased a flat in joint ownership and paying an interest of 6lakhs an year for the housing loan.whether we can claim both individually 1.5 lakhs each tax exemption.or only 75000 each.please advice us
Jacob,
If its a joint loan then both of you individually can claim upto Rs 1.5 lakh in the ratio of ownership.
dear sir, i have purchased a flat with my spouse as joint owner. The approx yearly interest component paid on home loan is 4.5 lakh. Whether 1.5 lakh limit shall be applicable individually for both of us or the same shall be divided b/w both of us. please give ur expert advise.
Dear Sumit,
If you have taken a joint home loan then you both can claim Rs 1.5 lakh seperately in proportion of your ownership.
Dear Sir,
I have a house which is rented out.
thereafter i booked second home for which possession is obtained and i plan to shift in it in coming months. Now Can i treat 2nd house as self owned and notionally rented out, for the purpose of getting IT Tax benefit on home loan interest without any limit ( ofcorse after deducting notional rent income) ?
Yatinder,
Yes you can treat that house as self occupied.
My son is working in a govt sector purchased a house on his wife name in the year 2002.Recently he purchased a flat by taking a loan in the bank and paying an EMI of Rs 16,500 pe month.Is he eligble for tax exemption on loan amount.
Thanking you,
S.Babu
Dear Mr S.Babu,
Yes he is eligible for the tax exemption on the loan amount if he has the ownership of the flat.
Hello Sir
I am planning to purchase a plot in bangalore. Please advise if i have go for a plot loan or buy the plot and then go for home loan during construction. I also want to know if the tax exemption are available for plot loans.
Harsha,
Tax exemptions are available only for construction of house and not for plot.
Hi,
Property is in both wife and husband name. Home loan taken on husband name with wife as co-applicant. Can both avail for tax exemption (50% each of loan interest)?
EMI is deducted from husband’s account, wife transfers 50% of EMI amount before ECS debit date. Is this fine? or should they hold a joint account and transfer the ECS debit to this account?
Regards,
Gauthaman
Gauthaman,
Both can avail the tax exemption in ratio of ownership of property.The best way to claim deduction is from a joint account or distribute EMI payments in case of individual account.
Thanks for your suggestions. Will take the necessary step
Regards
Gauthaman
Gautahaman,
A correction here.
You avail tax benefit in a joint loan in ratio of the loan.So if you have both have a 50% ratio in loan then each of you can claim 50%.
Dear Sir,
For a financial year , If the total interest payment ie. post possesion period interst and 20% of pre-possession period interst becomes more than Rs 1,50,000 , then whether this amount will be limited to Rs 1,50,000 itself for income deduction purpose?
Yatinder,
Both combine pre and post construction you can claim upto Rs 1.5 lakh.
I feel that the Rs.1,50,000 is not the ceiling if Second Housing Loan is taken to purchase a house and the second house is rented out . For the second house , there is no ceiling , even if the interest component goes beyond 1 .5 Lakhs
Yes Mr.S.Antony, on second house one can claim the deduction without any limit.
Sir,
We have plot on my Mother name and she is 60+ age, i want to take home loan for it’s construction as i m salried person.
How Can i get the rebate on home loan if i will pay the premium.
Regards,
Anil Gupta
Anil,
You should be a co-owner or owner of the property to claim the tax benefit.