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
Hi, We have bought a ready-to-move in home and staying there since May 2012.
House is on name of my husband, while I am co-applicant in home loan. EMI goes from my salary account. So How much we can claim to save IT, and whats best way to save maximum on tax, we both come under 20% bracket and has high basic. Thanks.
Vaishaly,
You are making wrong combinations for claiming income tax benefit.
For claiming any tax benefit you need to be a borrower of property either singly or with some share. If not then you cannot claim any tax benefit.However, income tax have a provision of benefits if property is bought on spouse name.But the taxman shoudl be convinved that thsi is not done only for tax benefit.
You both will be bale to claim your respective share only when you both are paying EMI.If EMI si going from your account then your husband will not be able to claim.Hence, first change your EMI outgo to a joint account.
You will be able to claim tax benefit in ratio of your loan only.So if it is 70:30 then teh tax benefit will eb in same proportion.
Nice post..you mentioned there is upper limit of 1.5L on interest deduction. On some online forum, I read that if you give house on rent, then you can show (interest paid – rent earned) as loss, and this entire loss is deducted from your taxable income. And this loss does not have any limit; meaning there is no cap of 1.5L on this loss. Now wondering what is correct information, cap or no cap?
Searching pune home,
Yes you ar eright.
FOR LET OUT PROPERTY, actual interest paid/payable can be claimed as deduction.
Thanks for your prompt reply, Mr Solanki. So for let out property (assume second property) if one takes a loan, and entire interest is deducted from taxable income…would it mean that the person would pay zero income tax? Is this at all possible? I think it still does not make much financial sense, you might be saving 30% on income tax, but you still end up paying interest to the bank.
Hi
Can the registration charges incured for buying new apartment be declared to avail tax benefit? If so under which section
Siva Prasad
Stamp duty and registration charges paid for transfer of property qualify for deduction under Section 80C.
I purchased a flat on August 2012 and I will be getting the possession on December 2014. So does this mean I can claim tax benefit only under section 24 (max of 1,50,000)? Please clarify.
Pradhan,
Any interest you have paid during the period if it was under construction, you can claim it after the possession.
Hello Jitendra,
Thank you for providing this information. So this means until I take possession, I can claim the principal amount (max of 1,50,000) only right?
Pradhan,
You can claim only the interest repayment of underconstruction period.
There is no provision of claiming the principal either during the period or after completion.
We have purchased newly constructed flat & registation is in my wife name but the Home laon from HDFC is joint & i am co-applicant. EMI is being paid from her salary.
Can we claim interst benifit as 50:50. If not, if EMI is paid in ratio of 50:50, can i avail benifit of 50% interest besides property is in wife name?
Dhanjay,
Income tax do have provision of claiming exemption in case property is in spouse name.IF EMI si paid form her account then you might not be able to claim it.Have the repayment from joint account then only you can claim any ratio.
Hi
I have recently purchased a house. It’s under construction and possesion is in next 2 years..Can i claim both HRA and housing loan interest if i am living in same location where i have purchased the new under construction house.
Sunny,
Yes you can claim HRA benefits. However, housing Loan benefits during underconstruction period can nly be claim after you receive the possession and that too only the interest.
Hi
I have recently purchased a house. It’s under construction and possesion is in next 2 years..Can i claim both HRA and housing loan interest if i am living in same location where i have purchased the new under construction house.
pls tell us our employees have taken the loan of housing up to 2.5 lakh , so pls tell me how much rebate will gate on principal and interest.
Regds
B.N.KATORE
Bandu,
On principal Upto Rs 1 lakh can be claimed under section 80C while on interest upto Rs 1.5 lakh can be claimed in a year.
Dear sir,
Regarding hosing loan repayment during construction phase it was told by friend that pre-Emi amount can be considered for income tax exemption. What is Pre-EMI? How it can be availed ? Any restriction for that? If it includes Principal amount or interest.
Please explain to know more
Regards,
Ganesan
sir,
We my wife and i have taken home loan from sbi to construct a home on previously perchased plot. The ownership is in the name of my wife. We have taken a home loan jointly.
my wife also working in state govt. but she is not under the income tax slab.
Can i claim the deduction from house property in my income tax return form.
Reply soon.
Thanking you
vikas meshram
I have taken a home loan. House is complete and is rented out. I am paying the emi which has both principal and interest components. will i get rebate on both principal and interest component to the tune of 100000 and 150000 respectively
I have a flat in Mumbai on which there is no housing loan. The loan was completed 5 years back. I work in Mumbai and stay in my flat there. Now I intend to buy one completed ready to move in flat in Coimbatore. The loan amount will be 35 lakhs. Can I get Income tax benefit on both principal and Interest part? I do not wish to give the new flat on rent. As my child is studying in a residential school in Coimbatore, I wish to stay there on vaccations or on their holidays. What should I do to get maximum tax benefit?
I have taken loan of Rs.42lacs. Can I avail of the taxbenefits u/s 24 & u/s 80.
I am not living in the same city as my house , due to my employment. I am also getting HRA from my employer. Can I also avail of the theH HRA exemption benefit.
Jaswinder,
yes you can claim both.
i have a home loan but i have given that house on rent, so in itr1 form where shoild mention the rent received,kindly help
You iwll ahve to fill ITR2 if you have any income from property.
My father in law have house in his name .He has taken loan from bank ,now he is retired from service and he is not able to pay installments of house loan so his son is paying installments.May his son take the exemption from income tax.
P.N.Malviya,
If he does not have any ownership in property he will not be able to claim any tax benefit.
Hello,
Would like to seek your views on the pre-emi interest reimbursed by the builder. In case the builder reimburses the pre-emi interest paid to the lender, would such reimbursement can be offset against the interest paid or is the reimbursement is treated as a taxable income?
Thanking you in advance
I have taken the housing loan for housing plot and constructed only 1 small room. I have got the Bank certificate for Interested paid (mentioned as per IT ACT 1961 you can claim in 8oc and 24 section). I am doubt whether to claim or not as its plot but got the strong certificate from the bank.
Can u help whether I can claim?
Hi Jitendra Solanki,
I have paid an interest of 1,20,000 in the last financial year towards my Housing loan. I am preparing to file returns towards my income tax. As you’ve mentioned, I will claim this money in 5 equal installments as this was part of pre-occupation interest.
I would like to understand from you as to what documents do I need to submit alongwith my returns so that my claim for interest towards Housing loan is accepted by the IT dept and I get the returns. I have papers related to my flat registration, sale deed copy, Bank Interest certificate. Do I need to submit the copies of these alongwith during the Income tax returns filing process? Please let me know.
Thanks,
Prasad
Prasad,
In e-filing you do not need to send any documents except ITRV which is generated.However, maintain all the records to ensure if any query is raised you have the proof.
thank you sir
Hi,
I booked a flat. Registration and formalities are completed.
Now I went to SBI bank and the manager says that there is differencr in Blueprint and description in Agreement.
Actually One of the bedroom was is not shown in Blueprint so bank says I looks like 1 BHK Vs 2 BHK mentioned in Agreement. I already informed the Builder and they are working on this.
Pls suggest if anything to be done from my end ?
Thanks,
Parag
Sorry My mistake in description –
Actually there is a bedroom infront of Kitchen and the front wall facing kitchen is not shown in blueprint for that bedroom …which reflects it as 1 BHK as per bank.