The Government is encouraging Individuals to invest in House Property and providing greater benefits to them by giving tax relaxation. If you are planning to buy a new house then it would be wise to go for housing loan even as it helps you to save tax on income. Payment of housing loan gives you an opportunity to save taxes by claiming benefit of both Interest as well as Principal repayment of the Housing Loan when you go for e-filing of tax returns. The Income Tax Act provides deduction under section 80C against Principal Repayment and exemption under Section 24(b) on Interest payment of Housing Loan.

There are 2 possible situations which would determine how you can claim the tax benefits. A Housing loan can be obtained against a property whose possession is received or is yet to be received as it is being constructed.

Housing Loan taken and possession received in the same year.

Housing Loan can be taken for purchasing or constructing a new house property. When a loan is taken in the same year in which the house property is purchased or constructed, one can enjoy the tax benefits on payment of both principal and interest component of the housing loan.

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Principal: The repayment of principal component of housing loan is entitled for exemption under 80C up to Rs. 150,000 along with all other permissible instruments like, life insurance premium, PPF, ELSS, NSC etc. 80C deduction for principal repayment of housing loan is allowed as soon as you start repaying the loan. This tax benefit can be claimed irrespective of the fact that the property is being self occupied or let out.

For claiming such deduction there are certain requirements to be fulfilled i.e. principal repayment will be considered for deduction only if the loan is not taken for improvement, extension, renovation or alteration of an existing house. Further, it cannot be claimed if an individual has taken home loan from relatives or friends or from any other source, which is not mentioned as Specified Institution/Department.

Interest: Section 24(b) of Income Tax Act entitles you to claim exemption on interest payment of housing loan against the property purchased or constructed. The benefit can only be taken from the year in which the possession has been received. The actual interest payable is allowed as deduction subject to maximum of Rs. 200,000 for a Self-Occupied property. In the case of Let-Out property, there is no maximum limit and the entire amount of interest payment can be taken for tax benefit.

If the fresh loan has been raised to repay the original loan and the new loan has been used only for the purpose of repaying the original loan then the interest paid on such fresh loan is also allowed as deduction. Penal interest on housing loan shall not be allowed as deduction. If the purchase price of the property is paid in installments with interest, the interest portion of the installment is an allowable deduction under Section 24.

Housing Loan taken but possession received next year or later.

Often it is seen that housing loan is taken but the possession of the property is received in the next or later financial year. It may be because the property is not completed or constructed. Tax benefits of housing loan can still be enjoyed but there are certain restrictions to it.

Principal: Till the house is not constructed and the possession is not taken over, deduction on house loan principal repayment is not allowable. You need to have possession and certificate of ownership to claim tax under section 80C. In simple words it is said that you should be the owner of the house property. After the possession is received, the deduction can be claimed normally up to a maximum of Rs. 1.5 Lakhs under section 80C.

Interest: The interest deduction u/s 24(b) can be claimed after the possession of the house property is taken over. However, the total amount of interest paid on home loan prior to possession of house property as can be claimed as pre-construction interest in 5 equal installments for next 5 years from the financial year in which possession is received. The pre-construction interest is allowed upto a limit of Rs 2 Lakhs including the current year interest payment on home loan. This can be claimed only after the house is ready and possession is taken over. If the house has been let out, the taxpayer can claim the entire interest component as deduction from the rental income without any restriction.

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Category : Income Tax (25164)
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Tags : Budget (1473) Budget 2014 (172) Housing Loan (37) Income Tax Deductions (418) section 24 (53) Section 80C (134)

10 responses to “Double Benefit on Taxes on Housing Loan”

  1. Mohan kumar says:

    Hi
    Can anyone tell that to claim home loan benefit in income tax return is there any list of home loan providers which are authorised for example all banks…

  2. Keshav Kumar Gupta says:

    HI,

    I bought a house in 2012 which is completed this year. My scenario is

    1. I have got possession of property on 18th march 2016

    2. I was staying on rent for entire year.

    3. As per rule, we can’t claim HRA and home loan interest benefit if house is in the same city as you working in.

    4. But my case is where i paid rent for full year as well as i got possession in this current financial year.

    Question I have are :

    1. Is it possible to claim both the benefits during Income tax return?

    2. If yes, Will it be considered Self Occupied property or To Let property for the purpose of exemption limit?

    3. How will I add previous year’s interest (divided by 5) in this year? If I don’t claim previous year’s interest now, can i do it next year?

    4. Any precaution I should take, as it is little complicated case?

    Thanks in advance.

    Keshav

  3. Bharat City A4 Tower says:

    Hello , I got possession after 3 yrs from the Loan sanction date.

    9.02.2012 – Sanction date
    2.05.2015 – Possession date.

    For the F.Y. 2015-16 – I can only claim 30,000 , as my company tool doesn’t allow me to claim the total interest paid benefit for 15-16.

    Now what about :

    1. F.Y. 16-17 onwards – would I’b eligible to claim the maximum interest currently paying , or it is now restricted to 30,000 per year for entire Loan tenure.

  4. Anany Goel says:

    no. tax exemption only allowed to you and not your son as the property is in your name. no certificate would help

  5. Anany Goel says:

    yes you can.. u/s 24 their is no requirement of possession upto 5 years so you can claim rs 58000 deduction pa for next 4 years

  6. Anany Goel says:

    yes under the head income from house property

  7. Anany Goel says:

    incomplete details

  8. Anany Goel says:

    for renovation no benefit u/s 80c and you can claim deduction of upto rs 30000 u/s 24

  9. Anany Goel says:

    although opinion of various consultants is divided in this matter, but in my opinion yes you can

  10. Anany Goel says:

    you will not be entitled to any benefit as only a owner/co-owner is entitled to benefits in income tax act.

  11. Mohamed says:

    please give a clear details about housing loan tax benefit details. because i urgently need to take house property loan for construction of our home. but house property documents are only in my father name. If i took house property loan can i claim house property interest and principal??????? please give your valuables suggestion for my clearance..

  12. adi says:

    Can I get tax savings for the amount that I pay for prepayment of principal amount

  13. S. P. Gupta says:

    I have taken loan against property which is fully repaid. Again I want to take loan on that property as renovation loan. Can I claim the deduction u/s 80C and exemption u/s 24(b) of Income Tax Act.

    Further If I have 2nd house the value of which is less than 30L and not given on rent.

    Pls suggest.

  14. Vijay bamrara says:

    I had taken home lone in 2011 and this year i paid 170000 as interest. How much rebate i got this year.

  15. Vijay bamrara says:

    I had taken home lone in 2011 and this year i paid 170000 as interest. How much rebate i got.

  16. sudhir k says:

    can i claim Income tax exemption for House Property tax i had paid?

  17. kiran says:

    I Have Purchased Under Construction Flat In Dec-2011 And I Got Possession Of The Same In May 2014. My Total PRE EMI Interest Amount Is 290000. So I Am Supposed To Claim 58000 Per Year For Income Tax Rebate For Five Years. But I Am Selling My Flat Now In April 2015 To Purchase Another Big Home In Different City. I Want To Know Whether I Can Still Claim 58000 Per Year For Tax Rebate For Next Four Years, As I Have Paid This Interest Earlier??

  18. T RENGARAJU says:

    I HAVE TAKEN HOUSE LOAN ON MY NAME, SINCE THE PROPERTY IS ON MY NAME, KINDLY CLARIFY MY SON IS ELIGIBLE TO CLAIM TAX EXEMPTION OR NOT, INCASE IF HE CLAIM AHT TYPE OF CERTIFICATE TO BE ISSUE TO HIM BY ME.

  19. RAVINDRAN S says:

    I have availed housing loan on september 2014. I have occupied the house on 2nd march 2015 as the building completion is over. My emi Rs. 11644 started on 31/03/2015.
    Even though I have paid Rs.17000 during the financial year the bank appropriate
    RS.11644 and kept the balance amount RS. 5356 as advance payment for the loan.
    From the loan account statement I came to know that out of RS.11644 they have
    adjusted RS.3822 towards principal and RS. 3822 and interest is Rs. 7822 and kept
    RS. 5386 as advance payment. The total interest payable during the financial
    yrar 2014-15 is RS. 45146. kindly inform be how much I am eligible for income tax rebate under section 80 C and Section 24

  20. kamlakar bhangale says:

    I hv taken 2 home loan from sbi, one is property purchase and another HL for constructing same property, now I m residing in this house since 2 yrs, can anyone tell me. can i take IT benefit for dual home loan. 9823842721

  21. pritesh patel says:

    Sir, I have two home loans, one loan which I have taken of home in Surat where my brother stay. Second home is now ready in Ahmedabad and will get possession at 15 march of running year. Can I get tax exemption on both home loans. Also can I get tax exemption of stamp duty and registration charge which I will be paying in running month. Can I also claim for rent which I paid for 1 year in ahmrdabad.

  22. Sachin chaudhari says:

    Sir I took home loan and paying emi. For year 2013-14 I have interest of 218350 and principle is 1,19,234. I hv given this house on rent of rs 15000 per month which is deposited in my account. I hv investment of rs 1,12,500.00 in 80 c. Now how these home interest and principle amount can give benefit to me. Also how the income of this house rent will be reflected.

  23. sudeep says:

    Sir

    If me and my friend purchase a Home with 50 -50 Contributuin and Property is registered jointly with our name , will we get the Tax benefit same way

    Please suggest

    Many Thanks
    Sudeep

  24. Rashmi says:

    How do I get interest exemption for two home loans ?

  25. Pkumar says:

    dear sir
    I am confused wrt to principal repayment on let out property . In my previous company tax exemption was considered for principal repayment on home loan but in new company they said since it is let out I can’t claim principal repayment of my home loan. I have the possession . I have declared the rental income as well . Can you please clarify if I can claim tax exemption on principal repayment on my letout property. I have read in different websites which says yes tax exemption is available and in other sites that it is not possible . Sincere thanks in advance .

  26. Parama sarkhel says:

    Dear Sir,
    I have a query. I Have 1 home loan from UBI. I live in Kolkata. If I take another home loan from SBI can i get the benefits of two different interest under sections 24(b)? please advice me…

  27. Sunil A says:

    Sir,
    I have purchsed one 2bhk flat at Pune in the name of my wife both are working in Govt Service. who will get the Income Tax benifit to my wife or husband can claim the housing loan benifit. the loan amount is deducting from my account. please clarify me

  28. jitendra kumar says:

    i have a home(registry) in the name of my wife. we have take a loan both (joint loan).can both we take rebate in interest and principal amount equally?

  29. chitmalwar s r says:

    i have taken two housing loans from national bank,can i get the benefits of two different interest under sections 24(b) upto 2 lacs. please advice me…

  30. ASHOK KHADE says:

    I have taken home loan and repay it in 2015. Now i am staying at Pune in my home and want to purchase another home and need to take home loan and i will give this home on rent at this time can i enjoy the benefit of this 80c & Section 24(b) of Income Tax Act ???

  31. Srihari Kandra says:

    Dear Sir,

    I have a query. I Have 2 home loans on two houses.
    1st one is in Hyderabad, 2nd one is in Greater Noida, UP.
    Both Houses are given on Rent.
    I am working in Mumbai….

    Can I get Tax benefit on Interest paid for both home loans under 24(b)?

  32. Manish Arora says:

    Dear Sir,

    i have paid Rs.300000/-(120000+180000) as Installment for Home Loan in 2014-2015. Home is with my wife and my Name Can we Both Take Income Tax Benefit of Rs.120000/-

    Regards
    Manish Arora
    9818151576

  33. Babu.C says:

    Dear Sir,
    Me and my wife both are working in hyderabad (both in 30% tax slab) and planing to buy our first house as resale property(2BHK flat) for 26L in sub-urbe in Hyderabad. I am confused in following two options.

    (1)We make a payment from own funds as much as 20L and raise remaining 6L from friends/relatives.

    (2) 11L downpayment and opt for Housing loan Loan up to 15L for 7 years (EMI around 25,000/ month @10.15%).

    As we both are Salaried and from tax perspectitive which would be the best option. i.e not claiming tax rebate under to income tax (limit on principle and interest on housing loan)OR claim tax benifit by taking housing loan.
    Thanks for your guidance.
    Regards,
    Babu

  34. s.chandra says:

    Sir, I have been allotted the flat from Gr Noida authority under BHS13 (BUILT-UP HOUSES SCHEMES. I am paying the installment (six monthly) as per payment schedule of Gr Noida Authority. Payment schedule (installment) clearly indicates the principal amount and interest amount. The total interest amount deposited is more than 1.5 lacs. My question is : Can I avail Income tax rebate? Please advise and tell IT clause and sub clause of the same to convince our Finance Deptt.

    Regards,

    S. Chandra

  35. ashok gohel says:

    Sir, I have taken loan from my office for residential property. i am residing in this property. I have taken another loan from Corporation bank for another flat in Noida Extension. The possession of this flat has not been given and it will given most probably in next one year. Kindly advise whether I can avail tax benefits on account of both the loans. If yes what are the benefits.

    Thanks

  36. Gaurav says:

    Can you please refer to the IT document which states that principal repayment under 80C can be claimed only if you have possession of the property.

  37. Subhash Chahar says:

    Sir, I have taken loan from my office for residential property. i am residing in this property. I have taken another loan from Corporation bank for another flat in Noida Extension. The possession of this flat has not been given and it will given most probably in next one year. Kindly advise whether I can avail tax benefits on account of both the loans. If yes what are the benefits.

    Thanks

  38. Senthilkumar says:

    Sir,
    I have aviled HBA from TNEB. I got the first payment of Rs. 7,50,000/- on march 2011 and got the second installment on august 2011. The Deduction of the Loan started from March 2012 (Rs. 23447/- p.m).I have been paying the principal amount till now. I have not claimed the IT benefit of accrual of interest till date. Can I claim it for the current financial year.How to work out the accrual of interest. Please help

  39. rosalie says:

    I have availed hsg loan in dec2010 and got possession in jan2015
    please let me know how much interest benefit can i get for the past years and how much for this year
    thanks

  40. jatinder mankotia says:

    Dear Sir,i have been sanctioned housing loan which is under disbursement & the house is still under costruction. however the repayment of the loan has already been started towards the payment of principal . Now please clarify whether this payment of principal amount will be eligible for tax benefitsunder section 80c during this FY.

  41. shekhar srivastava says:

    i have purchased constructed flat vid possesion in the year 2011 & borrowed loan in same year.In the year 2014-15, i will get rebate on interest component Rs 2 lac or 1.5 lac,plz confirm.

  42. Sanjay Tiwari says:

    Sir, I have taken House Building Allowance from Railway in year 2012-2013. After taking possession, monthly deduction from my salary for principal amount was started during year 2013-14 but deduction from salary for interest on HBA will start after full recovery of principal amount of HBA i.e june 2018. Question is that Whether may I take income tax rebate under section 24(b) for interest on HBA on accrual basis in 5 equal installments for next five years in year 2014-15 and onward or after actual deduction of interest from my salary during June 2018 and onward. kindly advise me.

  43. Satish says:

    Sir,
    I want to take loan against housing property and want to use for my personal family needs (not for purchase of residential property). Can I reduce/claim the deduction from my annual income (inclusive of saving bank/fixed deposit interest) for the interest which I have required to pay for this loan against property?

  44. sushma says:

    I booked a constructed flat rs. 20.00 lac in. Bhopal in Jan 2015 and possession will be handed over in June 2015.How will I claim tax benefit.
    I am planning to pay back this housing loan in next 9-10 month to get maximum benefit and then purchase another property. My EMI will start from Feb 2015.

  45. Jiten Dahra says:

    Daily tax advice housing loan

  46. Asst Exe Enginneer says:

    sir,
    Iam a kerala state government employee and recently received arrears of three years resulting a huge amount of income tax Is it possible to claim the interest on housing loan in 10E which are not claimed during the previous years for calculating the income tax purpose during the scrutiny period of income tax.

  47. Roopesh Mishra says:

    useful information

  48. Nilesh says:

    I booked a flat in under construction property 18 months back and got possession in Dec 14. So, I would be claiming full interest paid this year plus 1/5 portion of interest paid so far as pre-construction interest upto the limit of Rs.2Lac.

    My question is – if i sell this flat in April 15, would i be eligibile for claiming remaining pre-construction interest in subsequent four years when i will not be the owner of the said property. Advice please.

    Kind regards

  49. KUMAR K IYER says:

    I WANTED TO KNOW THE PROCEDURES TO BE FOLLOWED FOR CLAIMING HOUSING INTEREST EXEMPTION FOR INDIVIDUALS – AS I HAVE AVAILED HAND LOAN/PERSONAL LOAD FROM INVIDIDUAL TO THE TUNE OF RS.2,00,000 EACH AT 18% INTEREST AND WANTED CLAIM INTEREST EXEMPTION – AS LOSS AGAINST THE HOUSING LOAN PROPERTY – PLS LET ME KNOW THE PROCEDURS TO BE FOLLOWED

  50. Anil says:

    Dear sir,

    I had taken a loan for a flat. the loan sanction date was Apr 2010. I got the possession of the flat in May 2014.
    To take the loan interest benefits, when I entered the loan details to my office automated system, I was shocked to find out that I will not be able to take the full benefit of interest repayment since the possession date is more than 3 years from the loan sanction date.

    What do i do ?

    Thanks
    Anil

  51. Arvind Kumar Jain says:

    I have booked a flat in October 2013 and I have taken a loan against this flat in Nov. 2013 worth Rs. 26,96,000/-. Loan from the bank is being paid in installments as per the stage of building constructed. Bank is charging interest on the paid installments. My Question is that when shall I be eligible to claim tax benefit, how much and what manner.

  52. Joseph says:

    I have two housing loans on two different properties. Can I get tax benefit of both the loans?

  53. Zuber says:

    Sir,

    I have registered a property in Aug 2014 and I am paying an Emi of Rs. 31400 (Prin+int).

    The property is still under construction and I will be getting the possession in Jan 2015.

    Now my Q. is how I can claim both HRA till Dec 2015 and repayment of interest component.

    Thanks & Regards
    Zuber

  54. Sandeep says:

    Dear Sir
    I took a home loan for my new flat in April 2014 and fully EMI started from May 2014. I will get the hand over of the house in First week Jan 2015 .
    When I took the provisional statement for my house loan its indicating interest paid 1,94,000 and the principle is around 1 Lac .

    How can I claim in 80C and section 24.
    From April to January I stayed in a rented house whether I will get the tax benefit of rent I paid as HRA

  55. keshav says:

    Dear Sir,
    I have taken home improvement load for my house. I am paying principal amount and interst on it. can I get tax bebefit on both ?

  56. ram says:

    WHETHER LOAN TAKEN AGAINST PROPERTY (LAP) USED FOR CONSTRUCTING HOUSE, INTEREST ON THE SAME CAN BE CLAIM AS INTEREST ON BORROWED CAPITAL

  57. Padmassri says:

    My question is related to tax benefit for property under construction. I am thinking of booking a flat and my EMI will start from 2015 and I will get possession only in mid 2018 so will I be eligible to claim tax benefit under section 80C and 24(interest paid) in the FY2018 ? I had this doubt since I came across following link
    charteredclub.com/tax-benefit-on-home-loan/ where they mention that there is a limit of 3 year for the construction to be complete.
    So in my case will I loose out the tax benefit under section 24 since the construction duration exceeds 3 years ? Please advice.

    Regards,
    Padma

  58. L.A.RAO says:

    I TOOK HOME LOAN FROM A BANK TO PURCHASE A FLAT AT HYDERABAD DURING THE YEAR 2003 AND OCCUPIED THE SAME IMMEDIATELY.I AM STILL PAYING THE EMI TO THE BANK AND LIKELY TO PAY FOR ANOTHER FIVE YEARS. NOW IAM PLANNING TO PURCHASE ANOTHER FLAT AT BANGLORE BY TAKING ANOTHER HOME LOAN FROM BANK.WHAT WILL BE THE TAX BENIFITS IF:
    1.I RENT OUT THE NEW FLAT AT BANGLORE AND REMAIN SELF OCCUPIED THE FLAT AT HYDERABAD.
    2. I RENT OUT THE FLAT AT HYDERABAD AND OCCUPY NEW FLAT AT BANGLORE.
    YOUR ADVISE IS URGENTLY SOLICITED TO TAKE DECISION

  59. ca. BHAVESH SAVLA says:

    Agree with gaurav. Also, I think, as per a recentjudgement of the mumbai income tax tribunal even the penal interest on prepayment of housing loan is admissible.

    CA. Bhavesh Savla

  60. R.K.Khattri says:

    Q. In case Assessee have one Self occupied House property, he want to purchase one more House property & taking a loan. In that case benefit
    related to Home Loan- repayment, principal & Interest is applicable.

    Pl advice.

    with regards.

  61. Hakimuddin Sadriwala says:

    The article doesnt speaks abount section 80EE deduction. It would have been more useful.

  62. gaurav says:

    Sir

    It is confirm the deduction of principal amount prior to construction period is not permissiable under 80C. if it is true then from which time it is applicable because in act no one words are mentioned as it

  63. PANKAJ HASTWALA says:

    How about old property upt to 5 ;10 or further old

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