Deduction of Interest Paid on More Than One Loan Borrowed for Purchase or Construction of same House

There is no bar in section 24 of the Income Tax Act regarding the number of loans on which interest is allowable simultaneously. In fact ,the simple rule of the deduction of interest u/s 24 of the Income Tax Act is that whatever be the interest paid or due on loan borrowed for purchase or construction of house is allowable as deduction. So, whether you take loan from one bank or five banks , all loan should be utilised for buying or constructing the house for allowance of interest paid to all the banks.

However, as far as self occupied house is concerned, the allowance of interest is limited to Rs 1,50,000 per owner.

How to determine share in property?

The documents of registration of the property is the main document in which proportion the house is registered along different co-owners. If nothing has been written specifically about share in which property is shared between two owners (Like you and your wife ) in the registration document , the ownership should be deemed to be 50 : 50.

Can owners claim RS 1.5 Lakh each on co-owned self occupied property?

Yes , each co-owner is assessed for income from house property separately . Therefore , allowance of interest u/s 24 is also given separately. But interest is deductible only if the same is borrowed by co-owners i.e even if one is joint owner but not a borrower of the loan is not allowed any deduction of interest. Only the person borrowing the loan is allowed deduction.In case of joint loan , each co-owner gets 1.5 lakh of maximum interest deduction u/s 24 of the I T Act.

Question –  I and my wife are both salaried employees. We are purchasing a house jointly. I am taking a loan of Rs 25 Lakhs from Govt and another loan of Rs.10 Lakhs from HDFC which is on joint name of both self and wife. Total interest outgo will be approx Rs. 2.5 Lakhs in initial years. My question is- can we split the total interest equally between self and wife for the purpose of claiming deduction under Sec 24 C or only the interest component from Rs 10 Lakhs loan (which is in joint name) can be shared ? Also how to determine the share of property between husband and wife for the purpose of claiming tax deduction ?

Answer – As , you and your wife have taken joint loan from HDFC only , therefore, both co-owner can claim interest 50 % each in case of interest paid to HDFC. You can additionally claim for interest on loan from govt. sources to the extent that aggregate can not exceed RS 1.5 lakh.