Home loan entitles Individuals to Deduction Under Section 80C of up to Rs. 1.50 Lakh and Interest Deduction under section 24 of up to Rs. 2 Lakh. Articles deals with Faqs on Benefit U/s. 24 and 80C on Jointly Owned Property, Under Construction Property, multiple properties and Simultaneous benefit of Interest exemption and HRA.

Q-1 What are Income tax benefits of taking and repaying a housing loan under EMI Plan?

You will be eligible to claim both the interest and principal components of your repayment during the year.

  • Interest can be claimed as a deduction under Section 24. You can claim up to Rs. 200,000 (Rs. 150000/- up to A.Y. 2014-15) or the actual interest repaid whichever is lower. (You can claim this interest only when you are in possession of the house)
  • Principal can be claimed up to the maximum of Rs. 150,000 (Rs. 100000/- up to A.Y. 2014-15) under Section 80C. This is subject to the maximum level of Rs 150,000 (Rs. 100000/- up to A.Y. 2014-15) across all 80C investments.
  • You will need to show the statement provided by the lender showing the repayment for the year as well as the interest & principal components of the same.

Q-2 If I buy a house jointly with my wife and take a joint home loan, Can we both claim income tax deduction?

Ans:-Yes, if your wife is working and has a separate source of income, both of you can claim separate deductions in your income tax returns.The repayment of principal amount of the loan can be claimed as a deduction under section 80C up to a maximum amount of Rs. 1.50 (Rs. 1 Lakh up to A.Y. 2014-15) lakh individually by each co-owner.

In cases where the house is owned by more than one person and is also self-occupied by each co-owner, each co-owner shall be entitled to the deduction individually on account of interest on borrowed money up to a maximum amount of Rs. 2 lakh (Rs. 1.50 Lakh up to A.Y. 2014-15). If the house is given on rent, there is no restriction on this amount. Both co-owners can claim deductions in the ratio of ownership.

Q-3 My husband and I have jointly taken a home loan. He pays 75 percent of the EMI. What will be our individual tax benefits?

Ans: – As you have taken a joint home loan, both of you are eligible for tax exemption for your share of the EMI paid. For claiming income tax deduction, the EMI amount is divided into the principal and interest components. The repayment of the principal amount of loan is claimed as a deduction under section 80C of the Income Tax Act up to a maximum amount of Rs. 1.50 (Rs. 1 Lakh up to A.Y. 2014-15) lakh individually by each co-owner. The repayment of the interest portion of the EMI is also allowed as a deduction under section 24 of the Act, which is given under the head “income from house property”. In case you are living in the house for which home loan is taken, both of you shall be entitled to deduction in the ratio (3:1) on account of interest on borrowed money up to a maximum of Rs. 2 lakh individually (Rs. 1.50 Lakh up to A.Y. 2014-15). If the house is given on rent, there is no restriction on this amount and both co-owners can claim deduction in the ratio of ownership- 3:1 in your case.

Q- 4 plan to buy a house by raising loans from friends and relatives. Will I be eligible for tax benefit from all sources?

Ans: – Interest payment to friends and relatives can be claimed u/s 24 but only against a certificate received from them. In the absence of the certificate, you would not be eligible for the deduction. The recipient of interest income who issues the certificate is liable to pay tax on the interest income that he receives. As far as the principal payments are concerned, they would not qualify for tax benefit as loans only from notified institutions and banks are eligible for such deductions.

Q- 5 What are the tax benefits that I can avail of for repaying a home loan ?

You will be eligible to claim both the interest and principal components of your repayment during the year.

  • Interest can be claimed as a deduction under Section 24. You can claim up to Rs. 200,000 (Rs. 1.50 Lakh up to A.Y. 2014-15) or the actual interest repaid whichever is lower. (You can claim this interest only when you are in possession of the house).
  • Principal can be claimed up to the maximum of Rs. 150,000 (Rs. 1 Lakh up to A.Y. 2014-15) under Section 80C. This is subject to the maximum level of Rs 150,000 (Rs. 1 Lakh up to A.Y. 2014-15) across all 80C investments.
  • You will need to show the statement provided by the lender showing the repayment for the year as well as the interest & principal components of the same. Double Benefit on Taxes on Housing Loan

Q- 6 . Can I take advantage of tax benefits from a home loan as well as claim House Rent Allowance (HRA) ?

If you took a home loan and are still living in a rented place, you will be entitled to:

1. Tax benefit on principal repayment under Section 80C

2. Tax benefit on interest payment under Section 24

3. House Rent Allowance (HRA) benefit

Of course, you can claim tax benefits on the home loan only if your home is ready to live in during that financial year. Once the construction on your home is complete, the HRA benefit stops. If you took a home loan, got possession of the house, have rented it out and stay in a rented accommodation, you will be entitled to all the three benefits mentioned above. However, in this case, the rent you receive would be considered as your taxable income.

Q- 7. I have a home loan in which I am a co-applicant. However, the total EMI amount is paid by me. What is the total income tax exemption that I can avail of ?

Yes, you can claim income tax exemption if you are a co applicant in a housing loan as long as you are also the owner or co owner of the property in question. If you are only person repaying the loan, you can claim the entire tax benefit for yourself (provided you are an owner or co-owner). You should enter into a simple agreement with the other borrowers stating that you will be repaying the entire loan. If you are paying part of the EMI, you will get tax benefits in the proportion to your share in the loan.

Q- 8. I have two housing loans on two different properties. Can I get tax rebate under sec 80 C of both the loans?

Yes, you can get the 80C benefit on both loans. However, the total amount that you will be entitled to will be a total of Rs 150,000 (Rs. 1 Lakh up to A.Y. 2014-15) across both the homes.

The interest paid on a home loan is not directly deductible from your salary income for either of your flat loans. Income from house property will be calculated for each flat you own. If either of theses calculations shows a loss, this loss can be set off against your income from other heads. Please note with effect from financial year 2017-18 Govt has restricted the limit of set off of loss from house property against other heads of Income to Rs. 2 Lakh. Till financial year 2016-17 there was no restriction and assessee was allowed to set-off any loss from house property against other heads of Income. Please note the restriction is placed on set-off of losses and not on the amount of home loan interest that can be claimed as a deduction under Section 24 for a rented house property, the losses which could arise on account of such interest repayment can be set off only to the extent of Rs 2 lakhs. Such loss in excess of Rs. 2 Lakh can be carried forward for upto 8 Assessment Years succeeding the year of loss and can be set off against Income under the head House Property.

As for Section 24 deduction, on your self-occupied house you can take advantage of interest payments up to Rs.2,00,000 (Rs. 1.50 Lakh up to A.Y. 2014-15). For the other property, you can claim actual interest repaid, there is no limit for the same.

Q- 9.I live in Delhi in my own house. In 2011, I took a housing loan to fund the purchase of an under-construction flat in another city (Faridabad which comes under National Capital Region of Delhi but otherwise falls in Haryana). It is expected to be completed in FY 19. I haven’t claimed any tax benefit so far. What happens to the loan installments I have paid so far? Can they also be claimed for tax benefit?

According to the Income-tax Act, 1961, where the property has been acquired or constructed with borrowed capital, the interest payable on such capital for the period prior to the year in which the property has been acquired shall be allowed as deduction in five equal instalments beginning from the year in which the property is acquired. Thus, the interest included in the loan instalment paid by you during the construction period shall be eligible for deduction from the year in which the flat is acquired/construction is completed.

The principal amount of the loan repaid till date shall not be available as a deduction under section 80C till the time the construction of the flat gets completed. Once the flat is completed and the possession is handed over to you, you will be eligible to claim deduction for interest paid on the loan under section 24(b) and principal amount of loan under section 80C. The total amount of deduction available under section 80C shall be limited to Rs. 1.50 lakh (Rs. 1 Lakh up to A.Y. 2014-15). Thus, as of now, you are not eligible for any tax benefit on such loan repayments.

Q. 10 Is there any additional deduction which I can claim in respect of Interest on Housing loan in addition to interest Under Section 24(b)?

Ans. Finance Minister inserted a new section 80EE relating to the additional deduction in respect of interest on loan taken for residential house property. Assessee can avail the benefits of this section in A.Y. 2017-18 & subsequent assessment years till the loan is repaid. Purpose of this section is to promote house ownership & give a fillip to a number of industries like steel, cement, brick, wood etc. besides jobs to thousands of construction workers. to get more information on the please read the Full Article – Section 80EE Income Tax Benefit on Home Loan Interest

Popular Search – home loan tax exemption, interest on housing loan deduction for ay 2019-20, housing loan interest deduction for ay 2019-20, interest on housing loan deduction for ay 2019-20, housing loan interest deduction for ay 2019-20, section 24 of income tax act

Things you must know about tax benefits on home loan

1. Home loan borrowers are entitled to tax benefits under Section 80C and Section 24 of the Income Tax Act. These can be claimed by the property’s owner.

2. In the case of co-owners, all are entitled to tax benefits provided they are co-borrowers for the home loan too. The limit applies to each co-owner.

3. A co-owner, who is not a co-borrower, is not entitled to tax benefits. Similarly, a co-borrower, who is not a co-owner, cannot claim benefits.

4. Housing companies usually require all co-owners to be joint borrowers to a home loan. Loan providers specify who can be a joint borrower for a home loan.

5. The tax benefit is shared by each joint owner in proportion to his share in the home loan. It’s important to establish the share for each co-borrower to claim tax benefits.

6. The certificate issued by the housing loan company, showing the split between principal and interest for the EMIs paid, is required for claiming tax benefits.

(Republished with Amendments)

 

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Tags : FAQs (462) Home Loan (64) Housing Loan (38) income tax act (510) section 24 (58) Tax Exemption (53)

925 responses to “FAQs on Housing Loan & Income tax benefit”

  1. JIVTESH says:

    In 2012, I took a housing loan of 12 lacs to fund the purchase of an under-construction flat and loan was completed in 2015. construction of flat was completed in 2018 & possession of flat is given in may 2018. I haven’t claimed any tax benefit so far. What happens to the loan installments I have paid so far? Can they also be claimed for tax benefit?

  2. R Sreenivasulu says:

    I am planning to take HBA (House building advance for Employees) What are the IT benefits for this available? Can I claim both principal and interest from first year onwards or not?

  3. udayasargam@gmail.com says:

    Sir
    I take a housing loan from malappuram district electricity board co-operative society ltd for maintanance of residential house.can I deduct the interest and repaymant of that loan from my income

  4. mathimurugan says:

    Sir,
    If the home is taken over by the new bank in the year 2017 what will be the deductions for both the owners if the property is jointly purchased.
    If I take a loan from the LIC policy, is this interest amount paid is IT deductable.

  5. ajit kumar sahoo says:

    excellent explanation.

  6. P. Kumar says:

    Me and my wife are Jt. Account holders in SCSS and RD A/cs opened in Post Offfice. RD is of 5 years tenure, with my wife as 1st applicant but both contribute interest availed, towards monthly deposit amount RD. can both of us claim IT exxemption.

  7. Amar Singh Sethi says:

    One of my relative has taken house loan rs. 15 lac from pnb through hr govt. She paid monthly installment for the year 2017-18,and rs. 1 lac in addition to monthly installment. The bank has issued statement showing rs 96000 interest due for the year. The deptt has refused to give benefit of interest showing due. Whether she claim benefit of interest under section 24.

  8. S K VERMA says:

    Sir, I have taken House Building advance from my govt. office. Now only instalments of principals are being deducted .Only after completion of repayment of Principal , interest will be deducted from my salary. Hence interest is not being paid at present.
    sir, I want to know whether I can avail exemption in income tax in respect of both Principal and interest. please guide me.

  9. P.pavankumar says:

    I got three houses and showing income as let out and now I want take a apartment with house loan yearly interest may be 500000rupees.i got income from let out around200000 rupees.whether i get 200000 rebate on new house overall .Pl clarify.All are let out only as I am staying in govt.quarter. pawan/seisailam

  10. RAHUL GAUTAM says:

    My husband and I have jointly taken a home loan. But my husband pays 100% percent of the EMI from their account. Can we claim tax benefits for interest and principal into the ratio of 50:50.

  11. bhau says:

    my housing loan for the co oprative bank What are Income tax benefits

  12. naagesh rao says:

    My friend in his name took loan for purchase of apartment after paying for two years he died in an accident. His wife, nominee for the house, started paying EMI later. Is she eligible for rebate under 80c

  13. Sonu Verma says:

    I had taken a home loan in Jul 14. Took possession in Mar 16. Since the loan was partially disbursed i was paying the Pre-EMI’s till Feb 16. EMIs started from March 16.
    YEAR PEMI INTEREST Principal
    FY 14-15 60000 0
    FY 15-16 150000 0
    FY 16-17 160000 50000 10000

    So for claiming the Sec 24 benefit, which calculation is correct.

    CASE 1:
    PEMI for (FY 14-15 + FY 15-16)/5 + PEMI for FY 16-17 + INTEREST for FY 16-17
    provided the upper limit of 2 Lakhs

    CASE 2:
    PEMI for (FY 14-15 + FY 15-16+ FY 16-17)/5 + INTEREST for FY 16-17
    provided the upper limit of 2 Lakhs

    Can someone please help.

  14. Sonu Abraham says:

    I had taken a home loan from IDBI for my second house .I resigned from my job in Nov 2016 and migrated to Australia . I had been claiming pre-construction interest over the last 2 years when filing tax returns. I want to know I can claim the pre-construction interest this year also since I had not worked for the full financial year ( worked only for 8 months) ..

  15. Verinder says:

    I have purchased a flat in Zirakpur (Punjab) near Chandigarh in the name of my wife in 2014.
    Registry of property is in the name of my wife.
    My wife is a house wife with nil earnings and hence fully dependent on me.
    Till now, I was paying rent to my wife for the above property.
    The housing loan of the said flat is in our name – me and my wife is co-owner and the EMI is paid by me from my salary account.

    The question is
    “whether I shall get the benefit of income tax rebate or not?”

  16. Loansa Assis says:

    I read your article for home loan in lowest interest and how to procedure, but i had about for home, construction, property, housing, montgage all kinds of loans provider more information Get Easy Bank Loan

  17. bheru lal gurjar says:

    can i get rebate on the home cash loan scheme

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