CA Sandeep Kanoi

CA Sandeep KanoiBuying a House is nowadays is not easy considering the multifold hikes in property price in last 10-12 Years. It becomes almost impossible for middle and lower class to buy an house and those buying the house also finds it difficult to buy the same from their own saving without obtaining a home loan. Home loan becomes necessity to Purchase a house.

In this article we will discuss the tax benefits which one can avail under the Income Tax Act,1961 on Purchase of House property  (Including the Expenses on Stamp Duty and Registration expenses) and on Repayment of Home loan (Including Interest).  We will mainly discuss the Tax benefit available mainly under Section 24(b), Section 80EE and Section 80C of the Income Tax Act, 1961.

1. Income Tax Benefit on Home Loan Interest under Section 80EE Of Income Tax Act  – Benefit of this section can be  availed by Individual assessee. Deduction under this section is not available for any other assessee (like HUF, firm etc.). Individual can claim benefit under this section only when all the following conditions are satisfied, these are-

  • Purchaser should be first time buyer. i.e. he has never purchased any house and now he is going to purchase a house.
  • Value of the house should not more than 40 lakh.
  • Loan taken by Individual for the purpose of buy a house should not be more than 25 lakh.
  • On the date of sanction of loan individual does not have any own residential house property.
  • Loan for this purpose taken by individual should be from the Financial Institution or Housing Finance Company.
  • For this purpose, loan should be sanctioned between 01.04.13 to 31.03.14.

Assessee can take deduction u/s 80EE on interest payable on home loan upto 1 Lakh in A.Y.2014-15. It can claim deduction in two assessments year. Means if whole amount of interest payable upto 1 lakh is not claim as deduction in A.Y.2014-15 then remaining balance amount upto 1 lakh can claim in A.Y.2015-16.Total deduction under this section shall not be more than 1 lakh.

Read More – Section 80EE Income Tax Benefit on Home Loan Interest

ID-100235532

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

2. Section 80C for Investment in Residential House Property and for payment of Principal amount –  The Equated Monthly Installment (EMI) that you pay every month to repay your home loan consists of two components – Principal and Interest. The principal component of the EMI qualifies for deduction under Sec 80C.

Further Amount paid towards stamp duty, registration fees and other expenses for the purpose of transfer of house property to the owner also qualifies for tax exemption’. This is over and above the principal payment that qualifies under Section 80C. But deduction u/s. 80C for  total amount including Principal Loan Repayment and stamp duty and registration charges can not exceed Rs. One Lakh Fifty Thousand (Rs. One Lakh up to A.Y. 2014-15).

Section 80C provides that in computing the total income of an assessee, deduction shall be provided in respect of various payments/investments made as included in the Section 80C subject to a ceiling of Rs. 1.50 lakh on the aggregate amount of such payments/investments.

Read More – Section 80C – Investment in Residential House Property

3. Section 24(b) -Deduction of Interest on Borrowed Capital From House Property income – This deduction is allowed only in case of  house property which is owned and is in the occupation of the person for his own residence. However, if it is actually not occupied by the one in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.

The quantum of deduction for home loan interest is as per table below:

Sl
No
Purpose of borrowing capital Date of borrowing
capital
Maximum Deduction
allowable
1 Repair or renewal or reconstruction of the
house
Any time Rs. 30,000/-
2 Acquisition or construction of the house Before 01.04.1999 Rs. 30,000/-
3 Acquisition or construction of the house On or after 01.04.1999 Rs. 2,00,000/- wef A.Y. 2015-16.Rs. 1,50,000/- up to A.Y. 2014-15

In case of Serial No. 3 above

(a) The acquisition or constructing of the house should be completed within 3 years from the end of the FY in which the capital was borrowed.

(b) Further any prior period interest for the FYs upto the FY in which the property was acquired and constructed shall be deducted in equal installments for the FY in question and subsequent four FYs.

(c) The Assessee has to acquire before  a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of  Principal and Interest of the loan so repaid.

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70 responses to “Income Tax Benefits from House Property and Loan”

  1. mahendra says:

    Sir ,I have taken up a house loan for 32 L.My house has got completed in 2015 mar.I have also paid pre-emi int of Rs 5.5 L.I have claimed dedn on Pre -EMI int for FY 2015-16 and will get to claim for FY 2016-17.What about balance pre-emi int ,since the ceiling from FY 2017-18 will be 2 L?Will this 2L ceiling is for entire int component ie pre-emi and normal EMI or only normal EMI int?Please enlighten.Will I accrue loss for bal interest ie; pre-emi +normal emi,which is over 2L?

  2. sarma RV says:

    sir, i am 60 yers old and retired from pvt service, and had sold my old asset in oct’2016 and long term capital gain tax was indexed as Rs10,00 lakhs and now thinking to take another asset along with my son on sharing basis, as 50: 50 basis, for an estimated cost of Rs 50.00 lakhs.
    so i like to invest Rs25.00 lakhs and my son will go for a bank loan because he is working.
    so i like to know whether this way will it take care of my capital gain tax, please let me know.

  3. Prakash says:

    Dear Sir,

    I am a regular reader of your blog and find it very helpful for tax planning and investments. I have a doubt.

    I am a Govt employee. My gross salary for FY 2015-16 is Rs. 4,60,000/-. The mandatory deduction for NPS from my salary is Rs. 46,000/- and the same matching amount is contributed by the employer. I have also invested Rs. 1,40,000/- in PPF and ELSS funds. Please tell me how much deduction can I claim:-

    (1) Only Rs 1,50,000/- under Section 80C or

    (2) Rs. 1,40,000/- under Section 80C + Rs. 46,000/- under Section CCD (1B) i.e. total Rs. 1,86,000/-

    Your guidance will be very helpful to me.

    Thanks!

  4. SYEDA ALIYA says:

    i have taken loan for house construction on july 2016 but not yet finished construction and EMI also not started. my doubt is that can i enclose the interest on loan which is to be calculated. can i show this in IT

  5. ROSHAN LAL says:

    I HAVE BOOKED A RES.FLAT IN UNDER CONSTRUCTION PROJECT. IN OCT 12 AND TAKEN A LOAN DURING APR 2013.POSSESSION NOT YET GIVEN .i AM PAYING EMI SINCE SEP 2015 rS. 13000/-pm.
    WHAT ABOUT TAX REBATE FOR PRINCIPAL & iNTEREST

  6. krishna says:

    Sir / Madam,

    I am paying interest to my home loan. But I am getting some rent to the same house. I am submitting the same Income tax to my rent amount. Is there any posibility to save my bank interest in my case.

  7. Omparkash says:

    मेरी पत्नी के नाम प्लाट की रजिस्ट्री है वह ग्रहणी है।हमने मकान बनाने के लिए इकट्ठा लोन लिया है। मै सहकारी मिल मे नोकरी करता हूं।मेरी पत्नी कही से कर लाभ नही ले रही। मुझे कर लाभ कितना मिलेगा ।

  8. Vibhor says:

    Hi
    I had taken Loan in 2009 for construction of house in Jaipur which is going to over in the month of Nov 2016 and at present i am posted at Raipur
    -can i get second loan in raipur for purchase of new prop.
    -can i get second loan in jaipur for construction/ repair of my old house .
    please let me know how can i save my Tax in respect of HL

  9. manoj says:

    Hi, I’ve two properties in NCR while I work in Bangalore…Can I claim all three- HRA, Self occupied Interest loss and Let out interest loss with rental income?

  10. bhupendra says:

    Dear Sir,

    I am Bhupendra Patel, working with Mahindra & Mahindra Ltd,Pune

    During 2015-2016 period, my employer consider loss of property -55906 (property located at my native place,

    Loan starting from 2010)while preparing the form 16,

    I am also purchase the flat,@Oct-2013,and paid Pre Emi intrest as below,and I am getting possession in March-2016

    2014-2015 – 94,990(Pre EMI)

    2015-2016 -2,29,950(Pre EMI)

    2015-2016 – Principal -6622

    Interest-21582

    Can I claim amount as below,if yes ,in which column I have to fill up during return file

    2014-2015 Pre EMI Equally divided into 5 is – 18998

    2015-2016 I claim full as a get possession in march 2016 -2,29,950

    Total- 2,48,948

    Regards,

    bhupendra

  11. Abhijit says:

    Hi, Thanks for educating. I am paying yearly interest of approx 2.5 lakh and have a

    pre -possession interest divided into equal five parts which comes to 50,000. Which means i am eligible for 3 Lakh. Will i get a Tax rebate of 3 Lakh or 2 Lakh ?

    • Varma alluri says:

      You can show interest component including pre construction period interest 250000+50000 = 300000.

      In case you need help reach out to us dsssvtax@gmail.com and our experts will assist you.You can also call /whatsapp us : 9052535440.

  12. Ramalakshmi K says:

    Hi,
    I made home loan re-payment of 8 lakhs this month. I can show 1.5L for tax exemption under 80C. Is there any way to show the rest 6.5 L under any other section for tax exemption?

    Please advise..

  13. avinash says:

    Hello Sir
    I took the Home loan in December 2012 & getting property registry in June 2016
    Please let us know , How much tax deduction we will get.

  14. Nishant Kumar says:

    sir what is the deduction on principal amt and interest amt from gross salary for assessment year 2015-16.

    • Varma alluri says:

      principle deduction U/S 80C : 1,50,0000 and interest up to 200000 for self occupied property.for 1st time home buyers you will get additional 50000.
      In case you need help reach out to us dsssvtax@gmail.com and our experts
      will assist you.You can also call /whatsapp us : 9052535440.

  15. gopal says:

    what is the maximum deduction for home loan interest for A Y 2016-2017

    • Varma alluri says:

      interest up to 200000 for self occupied property for let out property On entire interest paid without any limit.for 1st time home buyers you will get additional 50000.
      In case you need help reach out to us dsssvtax@gmail.com and our experts
      will assist you.You can also call /whatsapp us : 9052535440.

  16. Jayadev Kadli says:

    Sir i have two home loans. First home loan from SBM where self occupied and second from HDFC which is rented. I have Life insurances too. How do i claim for Interest and Principal amount

    PRINCIPAL COMPONENT 1,15,491.00 (2nd home – HDFC) 74,886.00 (SBM)

    INTEREST COMPONENT 4,85,169.00 (2nd home – HDFC) 1,22,714.00 (SBM)

  17. shiva says:

    I home loan sanctioned on 26/03/2012. and i took possession on 06/12/2013. the interest which accrued in that period is about 125000/- which i dint claim till now.
    i just want to know that can i divide 125000 in five equal parts and claim that in this financial year and coming financial years

  18. shiva says:

    i made home loan repayment of 5 lakhs rupees, but from this 5 lakh i can claim only 1.5 lakhs. can i claim rest of 3.5 lakh in next financial year 2016-17.

  19. hitendra says:

    I and my wife are jointly booked a Flat in 2010 and took a home loan in Jan 2011. Registry of the flat is completed in Oct 2014 but I took the possession recently. How can I avail the interest amount of period Jan 2010 to March 2015 in the FY 2015-16.

  20. parth shah says:

    Sir,i have taken homeloan of 22.87 lac for ready purchase house.loan approved in nov’15. My emi is 21,544.by march i will pay around 1.2 lac to bank.kindly suggest how amount to be filled in form C & IT return? only i will get benefit in 80C or 80EE also? Kindly suggest.

  21. mukesh says:

    i am paid deposit extra rupee deposite in my loan a/c it will be tax benifit in 80c and count in repayment or other

    • mukesh says:

      i am regular paid housing loan installment rs.15560/- * 12 but in the year ening 30-03-2016 extra paid rs. 50000/- so this amount claim in 80c as a repayment or not

  22. Sumit says:

    Weather VAT Paid can be claimed under 80C in Payment of principal amt

  23. ramlal says:

    Hi All,
    I am employee in a ULTRATECH cement LTD and planning to buy a plot and applying loan from any SBI of Rs.12 Lac and I have no plan for any construction with in 7 years.
    Can I avail tax exemption on paying EMI to bank and interest.please clarify.

  24. Guset says:

    Hi,
    I have got the possession of my flat. After this I have sold it out. Can I avail the tax benefit.

  25. INDRAJIT BERA says:

    Hello,
    I have a business of photo studio. I live in rented room. I am going to submit my return file (Nil Taxable) for the year ending 31st Mar, 2015. Last Oct, 2014 a loan was sanctioned of Rs 13,00,000/- from bank in my personal name for purchase of Self Occupied flat but out of 13,00,000/- I received a draft of Rs.3,00,000/- in favor of Seller for advance booking. Month of registry of deed will be on or after Nov, 2015. Already EMI payment deduction has been started from my bank account from Nov, 2014. Total loan amount received from bank by draft (in favor of Seller), not my saving bank account. How to shown it in my return file??

  26. mhatre v k says:

    i m salaried persons i m taking a loan amt rs. 6 lakhs from credit society for house loan purpose.
    r this rebate for income tax.

    pls.reply me.

    thanking you

  27. Mithilesh Mishra says:

    Sir,
    i had taken a home loan of Rs. 20,00,000/- in Feb’2013 and taking the benifit of principal and interest benifit under 80C & 80EEE. Now in Jun’2015 i have transfered the outstanding balance principal to other back.
    now i want to know can we claim total amount paid from my own source prepayment only or we may claim total amount paid from own source as well as balance transfered from other bank too. Pls advise.

    Thanks,
    Mithilesh Mishra

  28. Krishna says:

    Hi Sir,

    I have bought a new house thru home loan but I am not staying in it. I am staying in rental house due to distance from office. My own house which is recently bought is 25 kms from office whereas rental house is 10 km.
    Can I show both i.e. Rental paid and loss on property due to EMI.

    Thanks,
    Krishna.

  29. Vijay Yadav says:

    Dear Sir,

    I have taken a loan for Rs. 17 Lac from Indian Bank in Mar 15 to purchase a house in joint name of me & wife, since I purchased it in Mar 15, am I eligible to take any deduction / rebate while filing IT return of FY 2014-15.
    Thanks & Regards

  30. Swaroop Kulkarni says:

    Sir,
    I had purchased a flat in 2008 and sold in recently.
    I want to use partial amount from this transaction to close my existing home loan taken for another (new) flat.
    Pls.let me know if this is OK and will this save me on income tax.

  31. Om says:

    Hi All,

    I am employee in a MNC and planning to buy a plot and applying loan from HDFC of Rs.6 Lac and I have no plan for any construction with in 10 years.

    Can I avail tax exemption on paying EMI to bank and interest.

  32. praneeth says:

    Sir, I have taken a home loan while the property is registered in my mothers name only. Am I eligible for income tax rebate?

  33. Gokul Joshi says:

    Dear Mr. Anil
    There are 2 situation arises in ur case
    Situation 1: The property might have been acquired by wife through gift from parents or inheritance property.

    In such case any loan taken jointly with husband or singly, husband will not be entitled to get any tax benefits of principal repayment u/s 80C and interest deduction u/s 24b even if he serve the loan repayment from his income. It doesn’t matter whether husband makes all (or part of) the repayments. It is even immaterial whether he is a first applicant or sole applicant or not an applicant at all. To claim tax benefits, husband needs to be the owner (or co-owner) of the property.

    The solution may be; if both the spouse enter into an agreement where wife declares to sell and transfer part of the ownership of the house property to husband, then husband will be able to claim the tax benefit. Such sell/transfer requires prior permission of the lender.

    Situation 2: The property has been acquired in the name of wife only, but source of fund is husband.

    Here the fact is that the property may have been purchased in wife’s name may not mean that the property belongs to her. If the said house property has been purchased out of husband’s own funds (but property in wife’s name) then husband becomes the actual owner of the property. To claim income tax deduction, husband needs to make a declaration with the Assessing Officer (AO) under Benami Transaction Act 1998, stating that he is the real owner of the property though registered in his wife’s name. Once it is done, he will entitled to all deductions available to an owner of the Property relating to repayment and interest on housing loan under the Act.

  34. Anil says:

    Sir, I have taken a home loan while the property is registered in my wife’s name only. Am I eligible for income tax rebate?

    Regards

  35. Vivek says:

    I and my wife are jointly purchases a Flat for the financial year 2014-15 with a Housing loan form SBI Bank and re-paying EMI from our joint A/c.but there is no where mention in Deed of Conveyance for percentage of share between I and my wife.What will the ratio to get the benefit of U/s 80C and 24(b) for both of us.Please guide. – See more at: http://taxguru.in/income-tax/income-tax-benefits-house-property.html#sthash.Q6Y0lVfU.dpuf

  36. rajendrakumar meshram says:

    Sir , i have purchased plot by taking loan from NATIONALISE BANK 40/- lakh .for purchasing of plot and construction . Earlier i have avail rebate for flat .
    Now i can avail income tax rebate. pl clarify .
    Thanking you

    from rmmeshram nagpur

  37. K.K.Chakraborty says:

    I have applied for one flat of chhattisgarh housing board and taken loan of 2000000/- from my company Steel Authority of India. My company had sanctioned loan in 2010. In Fy 2010-11 company had sanctioned loan of two installment of 430000/-each and rest in fy 2011-12. I was issued completion certificate in 31/03/2015 though housing board promised to complete by 2014 March.

    Now pl. advise me whether I can claim full 200000/- interest benefit on house loan or not. And also benefit for the pre construction periods.

  38. Biplab Nayak says:

    I have purchased a residential Plot and taken a Home loan on INR 44 lacs from SBI , can i show the Principal and the Interest in declartion of Investment and other for the purpose of deduction of Tax

    Am i eligible for income tax rebate. please clarify as early as possible.

    Home loan Sanction-29.06.15
    Date of possesion of residentail Plot-03.07.2015

  39. Satish K says:

    Hello!

    I will be completing my home loan..Will be left with some savings in hand.Please advise me ways for investment for IT tax benefit….I leave in Mumbai…

  40. Revathy says:

    Hi,

    I have query regarding 54EC, the property sold and the amount has been invested in NABARD or NHAI bonds for about 3 years. After this lock up period, do I have liberty to use the money in any savings or I can utilize the amount or do I really need to buy a property to avoid tax?

    Can someone help me in this query!!!

  41. S Rama Rao says:

    is there any income tax exemption for purchase of house site?

  42. S Rama Rao says:

    is there any income tax emption for purchase of house site?

  43. aditya says:

    respected sir
    i had purchased a flat taking loan of rs. 1200000/- from lic housing finance ltd in 2010 and getting income tax rebate under section 24(b). now i wants to sell this flat and purchase an another flat, taking loan from bank. can i get income tax rebate under section 80 C and section 24(b) of interest on this new loan.
    please give answer.
    waiting for your suggestion.
    aditya
    allahabad

  44. Raj sharma says:

    Dear sir,
    I am working in a company my salary is 65000per month.
    I applied a house of Awas Vikas Brahmaputra scheme in ghaziabad .so i received a letter from Awas Vikas side ,finally I be a part of the owener of a flat .on start I paid 1lac45thousand as a participatation money from my salary then I am paying 1lac65thousand quarterlybasis from my salary by demand draft .so i want kow how can i take tax benefit from my salary .
    Waiting for your reply
    Thanks
    Raj

  45. Raj says:

    If a person have taken home loan less than 15 lakhs then he / she have cleared the loan in such case the person prefer to construct one more floor in the building which will come around 10 lakhs in such case how much one can get IT benifits on house loan.

    First the perosn has constructed Single BHK 750 SFT house and he prefer to convert the house as 3 or 4 bedroom house 1800 SFT house.

  46. tirpude says:

    Sir, I had taken Home Loand from two different banks for purchase of flat. One flat is already occupied and another will like to get possession within a month or two. Can i get deduction of Principal amount and interest for these two flats? please clarify!

  47. arvind singh says:

    I have taken an amount of rs 13lac on loan for purchase of a flat but the builder has not been given the possession the proposed possession time is Oct 15 . I have asked for the rebate in interest of home loan in my admin but they refused . I want to know how can I claim the interest.

  48. Vickey Rihal says:

    Sir,
    I have taken a home loan while the property is registered in my wife’s name only. Am I eligible for income tax rebate?
    Regards

  49. Pawan says:

    Sir,

    I have taken a home loan while the property is registered in my wife’s name only. Am I eligible for income tax rebate?

    Regards

  50. Rajiv says:

    Sir,

    i have inherited one property in Delhi in financial year 2015~2016.so please tell me :-
    1. How can now I show it in my income tax return?
    2. I already paying installments of a plot which is still not handed over?
    3. How to save tax by buying another house. ?

  51. PRASHANT says:

    I have taken housing loan for my residential house & taking benefit of Housing Loan deductions under 80C. Now my wife, who is also a Income Tax payer has purchased a Flat in her name. Can she claim Housing Loan deductions under 80c?

  52. santosh jain says:

    I have purchase a Residential House Property Nov. 2013 & Loan Interest claimed in A.Y. 2014-15. But I Residential House Property Sale July 2014. So Loan Interest claim for 01-04-2014 to 31-07-2014 for A.Y. 2015-16. & Short term Capital gain Rs. 4 lac. I new Residential House Property purchase & new house loan.

    Can you help me for position in A. Y. 2015-16 ?
    Thanks
    Santosh Jain

  53. Sharad Jha says:

    Dear Sir,

    I booked a second home in Feb 2011 (for investment) for which I took a Rs. 30 Lakhs home loan in April 2011 (FY 11-12). The property was under construction and I am about to get the possession in March 2015. I have paid Pre-EMI’s to the bank since April 2011. My existing residence is self owned and is in the joint name of my mother and myself. There is no home loan taken on the 1st property.

    My questions:

    1. Am I entitled to claim any tax deductions on the second property?
    Honestly both the properties are close to my work place.
    2. If I get possession in Mar 2015, would I be entitled to claim 20% of the
    Pre-EMI interest that I have accumulated from April 2011 to Feb 2015 starting
    from FY 14-15 itself?
    3. Am I entitled to claim deductions on account of interest on loan if the
    residential property is not rented and just lies vacant?
    4. Can any deductions be availed on Service Tax / MVAT / Property Tax paid for
    property under construction?

  54. arshad says:

    i have purchased a house for my residence . i am paying interest of r/s 243000=00/ yea up to what limt can i get rebate

  55. Digvijay singh says:

    sir,
    I have purchase a new 2 BHK flat in the month of jan-15 @ 40.5 laks and paid Rs. 8 lks as booking amount.For remaining amount got home loan sanction from bank.Since I have purchased this property at end of financial year and yet EMI not started.
    pl guide wether I will get tax benefit for my booking amount paid.

  56. Mohan Ram says:

    Hi, I have purchased a home and incurred contruction cost agreement registration fees. Can i claim tax exemtions on it?

    I know i cannot claim my interest payment paid till i obtain possesion of home.

    Thanks

  57. kiran says:

    Can you help me with the form to submit my declaration for Home loan Principal paid.

    I only see a form for Interest paid.

  58. Lakshmana Nayak says:

    I purchased a plot with home loan and constructed and occupied a house in same plot with one more home loan within a period of 2 years. both loans are from state bank of India. whether the interest and principle amount repaid on both plot loan and construction loan are eligible for income tax rebate. please clarify as early as possible.

  59. Shiva says:

    Sir,
    I have taken a cottage in a Retirement Home on life time lease in AY 2014-2015. I paid Rs.sixteen lakhs by taking an advance from my Term Deposit from a Bank and repayed the same with interest in AY 2015 -2016. Can I claim any deduction on the Interest I paid on my advance?

  60. chandan karmakar says:

    I and my wife are jointly purchases a Flat for the financial year 2014-15 with a Housing loan form SBI Bank and re-paying EMI from our joint A/c.but there is no where mention in Deed of Conveyance for percentage of share between I and my wife.What will the ratio to get the benefit of U/s 80C and 24(b) for both of us.Please guide.

  61. SURESH BABU says:

    sir, My wife and I are employed in government service. She take a house construction advance loan taken from her employees society. But she did not claim the benefit in his income tax statement. The authority gave her a no claim certificate. In this circumstances I include the interest and principal amount to my tax statement. But authority reject amount. Please sent me your valuable replay

  62. seaman says:

    Kerala govt HBA (house building advance). first repayment is only principal in installments fully and then start interest only ie.not emi basis principal repayment started before completing construction what are the tax benefits.?

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