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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953 Comments

  1. Dhaval says:

    Sir, I wants to know whether TOP – Up loan to existing customers of Housing Loan eligible for 80C and 24(b) deduction, if yes how much then can claim ? and what are the conditions for claiming the same ?

  2. PIYUSH KUMAR GHOSH says:

    I purchased a flat worth 2450000 on 16 th December 2015 and sold it on 15th january 2021 and the entire amount was deposited in a capital gain account.i have taken benefits under section 80C and 24B from the house building loan taken for purchasing the flat which i sold on 15th january 2021. now if i purchase a new flat in ready condition or book a new flat under construction condition within 2 years from selling the previous flat taking a home loan then will i be again eligible for tax exemption under section 80C AND 24B. kindly give response.

    1. Girdhari lal sehta says:

      If i sell a property in mid year than whether i will be eligible for rebate under section 24 for interest paid. 2. In calculating long term capital gain whether circle rate is taken into account or cost inflation index value or whichever is lower

  3. Venu sharma says:

    4 friends want to buy a arge residential dite property and construct 1000 sft each house in a single structure …can we get home lian from a nationalised bank …in india. If do what step I follow..pl guide

  4. Pawan lodhi says:

    In this financial year , I have shifted my home loan to another bank after 7 month
    Can I upload (Both IT certificate) or Claim both bank Interest and principal amount in tax saving 80c and 24 section ?

  5. Palaniyappan says:

    LIst last year, I and my wife is claiming tax deductions 50% each from housing interest and priincipal. But from this year, My wife is not working, can i take 100% tax deductions or i need to follow same 50% claim till loan repayment is completed.

  6. Rajesh Verma says:

    Sir,
    This is regarding Capital Gain Tax: A house sold for 1721000/- ,where existing loan (on property being sold) was pre-paid by seller,the loan outstanding was Rs 5 Lacs, so do this 5 Lacs will be deducted from 17.21 Lacs for capital gain calculation?

  7. Chandan Kumar says:

    Hi , I have a Flat in my name & my wife is not a owner of it.I work in Govt. sector and she is a SBI Staff.We together applied for the SBI home loan in which she is first borrower & I am second borrower.Home Loan is sanctioned under Staff category with simple rate of interest applicable.
    She is paying the Loan EMI from her SBI Salary account.She can’t avail tax benefit as she is not a owner in the property.
    But I wanted to know can I claim tax benefit if provisional income tax certificate reflects the name of my wife and me also ?

  8. Aldenpinto says:

    Is it a compulsion to have a co-applicant when applying for a home loan …..it’s my first home loan and want to avail tax benefits. I am planning to get home loan and the banks are suggesting to add co-applicant. I am not married I work on the ships and was planning to buy a house.

  9. RAM DHINGRA says:

    Sir I want to know that :-
    I have purchased one Flat in joint name me and my wife with loan from Bank and some amount Say Rs.50,00,000 from my father as loan. Can I claim the interest amount paid to my father as Fixed Deposit rate in a bank which my father was getting at that time. irrespective of Bank Loan interest and if so what is the procedure to add the interest on loan from friends and relatives.

  10. habeeb says:

    Sir,
    i have taken the loan from LICHFL for purchased the house and avail the IT exemption on principal and interest amount of loan amount. now, i would like to take HBA from state govt. for purchasing of another house. from the both house loans, which loan principal and interest amount will be availed as tax exemption. pl clarify.

  11. Asma says:

    Hi , We own two properties -both on loan on me and my husband’s name.
    1st Property in Mumbai – Rented out . rent is transferred by tenant to my husband’s account and my husband pay’s the complete Emi for this house and he claims the tax benefit of this one

    2nd Property in Mumbai-Self occupied , complete Emi is payed by me .

    Can i claim the tax benefit of this 2nd property home-loan , do i have to add the rent of the 1st property to my annual Income .

    Thanks in Advance for your help.

  12. jagadish says:

    I have purchased a plot wit small old house.as I am a govt. employee will I get HBA to construct a new house after demolishing the old one, If so how?

  13. RAJNEESH PATEL says:

    I m living in Government quarter. If i take possession of my new house on 18.03.2019 and not vacated government quarter till 31.03.2019 than rebate against income tax payment can be availed or not. Plx reply.
    (rebate u/s 80 c and u/s 24)

  14. Ali says:

    My name is Ali and I am a govt employee have a site in my wife name I want housing loan on my salary she is house wife then can I get tax exemption benefits on it.

  15. N. Ravishankar says:

    I am a Govt. employee. I have taken loan for purchase of a site from a private Bank. The Bank has given a certificate for claiming deduction under Section 80(C) and 24 (B) of the Income Tax Act. Whether the loan installments paid towards the purchase of a site property is eligible for Income Tax Rebate? Please clarify.

  16. Pardeep Suman says:

    We have purchased house and I and my wife both are owner of house , we have purchased house jointly but housing loan EMI only paid by me because only my eligibility counts but my wife is co applicant.
    EMI deduct from my account .
    Can I claim 100% rebate .

  17. Buren Shah says:

    I am joint owner with my father and brother. I want to purchase the proportionate share of my father and brother through sale deed. I want to know that said transaction of sale is eligible for home loan ?

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