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 would like to know the Tax benefit things in home loan—–
As I already have a one residential property with home loan. This financial year my Principle amount is Rs.60000 & Interest component is Rs.220000. Out of that I am calming Rs.150000 in section 24c as interest component.
I am planning to buy another property for investment purpose of Rs.30Lakhs with the home loan Interest component of Rs.280,000 Pls confirm if the same amount I can claim more for section 24c as interest component.
Pls help.
Hi, I have purchased a flat (under construction – construction link) & possession I will get after around 4 years from now. Now I am planning to make the remaining payment (of around 25 lakhs) via home loan & would like to start repayment back to bank too immediately (monthly EMI including principal+interest).
My question: Would I be able to avail any tax benefit on interest before getting possession or before I get possession (say after 4 years), whatever interest I am paying will not be counted at all?
My second question: Is it possible that I can avail tax benefit on both: HRA as well home loan interest?
Regards Ambrish
Dear Ambrish,
Any home loan interest you pay during construction period can be claimed in 5 equal yearly installments after the possession of your house.
Yes, you can claim both HRA and Loan interest benefit provided you meet the stipulated conditions prescribed in tax lawst
Thanks Jitendra ji for the update.
A doubt here: Say I took loan of 25 lakhs & start paying EMI (principal + interest) to bank from Feb 2013 and I get possession of the flat by Apr 2016. Now say in these 3 years (from Feb 2013-March 2016), I pay around 2 lakhs as interest. So am i eligible to take tax rebate in financial year Apr 2016 – Mar 2017 for this 2 lakhs interest which i paid in past 3 years?
What I understood from your answer is: In Apr 2016 – Mar 2017, I will be eligible to take tax rebate upto 1.5 Lakhs & remaining 50k plus the interest for this financial year (Apr 2016 – Mar 2017), I will be able to take in subsequent financial year & so on.
Is this correct understanding?
Regards Ambrish
hi,
i m selling my one flat which is purchase in year 2002 and not shown in my books …and getting another property on my wife name … i want to know who we can save my capital gain tax..
Nitin,
Purchase of house in not shown in your books since you already have given tax on the source of funds you are utilizing.
On capital gains it will be saved if invested in another property within two years from date of selling your existing one. But you need to consult a CA first if you are registering it in your spouse name completely.
Hi, I have constructed a house in my home town(Lucknow) with a loan of 30 lacs and will be on rent from this month. Currently I am staying in a rented house in Bangalore. Can I claim tax benefit on the actual interest paid (under 24b) ? Or it will be only 1.5 lacs.
What is the benefit if my parents will stay there ?
Dear Sachin,
On first house you can claim only Rs 1.5 lakh interest p.a.
No. You can claim for full exemption on the rented house (limit of 1.5 L does not apply).
You have to deduct 30% of the rental income received from the total interest paid though.
Dear sir,
I have two house in one city.
First home loan over where i am staying right now.
Second home loan started, which i have given on rent.
Can i claim upto 1.5 lakh or unlited(total) intrest of running loan ?
Dear Vinod,
You can claim unlimited for your second loan interest.
Hi
I have purchased a flat and now I am getting possession of the flat. I have got the flat finanaced from the bank and currently a loan is ongoing. Now, I have to register the flat. Bank has agreed to fund the stamp duty/registration charges. If I get stamp dump charges financed from bank, will I be able to claim the tax benifit under 1.5L for stamp duty charges as well just like the ongoing home loan or are stamp duty/registry cost not covered under 1.5L rebate that you get on interest component paid for the current financial year.
Also one more question, I want a second car parking as well? So, will the second parking be covered under 1.5L interest section as well under Section 24?
Topguy,
Yes you can claim stamp duty and registration charges but under Sec 80C .
Sec 24 benefit is on home loan which is the cost of house excluding stamp duty and registration charges.
Dear Sir,
I purchased a home by taking loan at my hometown (Mathura) in which my parents is staying. And I live in the company provided house at my workplace in Guwahati.
My eligibility of tax benifit
1. Under section 80 C 1 lac. Is it include my PF amount also?
2. Under Section 24 b , 1.5 lac or unlimited?
Dear Krishna,
Yes, Sec 80C includes PF amount and under sec 24B you can claim upto Rs 1.5 lakh for first house.
Dear Sir,
i am planning to opt home loan, may be i wanted pay only interest upto Mar, 31st 2012. due to house it will be under construction, can i get claim for paid interest amt. and what has to be get for getting supporting doc from bank.
Hi Rudrappa
you can only claim rebate for interest paid in the year in which you get possession of the house under construction. The rebate can be claimed in five equal annual installments starting from the year in which possession is obtained.
For supporting docs you need to get home loan interest certificate from the bank which clearly states the EMI paid, pre EMI interest portion , interest portion and principal paid portion.
Hi, Can the rebate be taken after posession for the interest which is paid while the property was under construction. For example, I started paying interest to bank from Feb 2013 till Apr 2016 & i get posession in Apr 2016. Am i eligible to take tax benefit in financial year Apr 2016 – Mar 2017 for the past 3 years? Regards Ambrish
Hi,
I have 2 houses (One is self occupied and another is also self(Parents staying)) and for both i am repaying the loan. Whether both can be shown in income tax benefit?. If so, how? If not, what to do? Please clarify.
Nanda,
Yes.on first house you claim upto Rs 1.5 lakh while on 2nd there is no limit.
hi can you clarify on the part of no limit on 2nd house. you mean there is no limit of income tax benefit if you have 2nd house??
I have purchased a flat in mumbai costing amount Rs. 63,00,000/- where I am a owener and my wife is co-owener of the flat. Me & my wife both are working in private organisation.We have taken home loan of Rs.36,60,000/-, where EMI Rs. 37,134/- is deducted from my salary.Currently we are staying in the same flat.Now my question is what is the limit for me & my wife in case of interst and principle amount on which income tax rebale will be claimed.
Hi,
I have a self occupied house on which I am claiming annual deduction of Rs 1,50,00 towards interest paid on housing loan.
I am planning to buy a second house through another housing loan and give this property on rent. As I understand i there is no limit on claiming deduction on interest on rented out property.( To be claimed as loss on house property after deduction the rent recd)
My question is can I claim both:
1) Deduction of Rs 1,50,000 for self occupied house
2) Loss on house property for the 2nd house.
Jitender,
It can be claimed in the ratio of your loan.So if you are bearing 80% and spouse 20% of the loan then same ratio will apply in case of tax benefit.
Dear Sir,
this year i had taken home loan interest is paying from january. already i claimed 80c and can i also avail sec.24 or not please let me know from which sections i can claim and what are the documents required for that
Shilpa,
Yes, you can claim under se 24 upto Rs 1.5 lakh if the house is fully contructed. You will need certificate from the financial institutions you have avialed the loan.
I have taken hsg loan in 2009 for under construction flat at NOIDA and interest for three years has been accumulated Rs.360000/- and current year’s interest is Rs.100000/-. I have been handed over the possesstion of flat in this year i.e in Sept 2012. Please let me know the total interest exemption for this finacial year.
Regards
S.C.TANEJA
Hi Subhash,
“As per Income tax pre construction period means Interest up to the end of Financial year ,immediate proceeding to the year in which house is completed.
suppose loan is taken on Jan ,2008 and House is completed on 31.01.2010, in that case pre -construction Interest is taken from Jan 2008 to March 2009.
In above example ,even if House is completed on 31.03.2010 then also the pre construction Interest is considered From Jan 2008 to march 2009”.
So in your case you will be claiming Rs (360000)/5 as the interest deduction.
Hii sir,
I am working under the central govt. of india. now i want to take home loan for the construction of the home which is on the name of my parents. so if i wanted to be the co owner to claim tax benefits then wat do i need to do. will my parents write a will that will work? or is is mandatory to make a new registry on my name?
Dear Tarun,
The property has to be transferred in your name to get the loan benefits.Consult a lawyer.
HELLO SIR I AND MY WIFE TAKEN A HOME LOAN OF 24 LAKH. I M IS THE CO-APPLICANT IN BANK DOCUMENT. AND THE REGISTRY OF HOME IS TO MY WIFE NAME. THEN CAN I TAKEN TAX BENEFIT IN MY INCOME.
Hi Mahendra,
Yes, Income tax allows deduction in case property is in name of wife only if the purpose of purchase is not only to claim tax benefit.
“I have taken a home loan from Icici Bank for purchase of property, however my parents gave me money for the down payment, I pay interest to them for the amount of down payment, what certificate would I need to show my company so that they consider interest payment by me to claim tax exemption U/s 24. & can I claim principal repayment u/s 80”
And what if the company which I work for says that this is not possible do we have any incometax website which clearly states that you can claim deduction for interest paid to parents. Kindly let me know of the same as I it would be of great help to me.
http://www.dnaindia.com/money/report_home-loan-from-relatives-eligible-for-tax-claims_1504715
Shridhar,
You cannot claim under sec 80C for the loan taken from your parents. You can claim only the interest part.However, you should document this in writing clearly mentioning the amount of loan and repayment schedule.Good to register it for proof.
Dear Sir i have taken home loan for purchasing the constructed house but nobody is residing in it. i reside on rent in same city.Can i take tax exemption under 80c, section 24 and HRA benifit.or to get these benifits the constructed house must be rented out….pl advise
Sir,
My form 16 says, Rs.58112 is my interest paid for my housing loan, u/s 24(I) (VI).
Investments such as LIC, PF etc come as Rs.101498, hence Rs.100000 is shown as rebate and relief under Chapter VIII, U/s 88. Can u please help me on how to enter these figures in ITR-1, excel utility. I mean where to enter Rs.58112 and 100000
Dear Jitendra,
I have taken loan of Rs 14,90,000 /- in Indian bank and bought a plot , can i avail the tax benefit for this type of loan ? What documents should i ask from then Bank to submit in my company for IT declaration. Also is it possible to extend the same Loan for construction of House ?
Pls advise.
Thanks in Advance
Benny,
You cannot avail benefit from loan taken on a plot.Its only for construction of house.
Dear Team,
Greetings,
I have taken House Loan of 30 Lakhs of which i will be paying around 3,50,000 per year.
Kindly let me know what is the Maximum amount i can claim tax exception for?
Also Please note that the house loan has been taken for buying a SITE and not building a house.
Please assist..
I am a salaried employee and taken personal loan from my relative for purchasing a house, can I avail exemption u/s 24, as interest paid on housing loan and also clarify to take deduction u/s 80 c regarding principal payment.
in short, if any body takes loan from his relatives for acquiring home, will he be eligible for taking dedcution u/s 24 & u/s 80 C