Buying 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 (Resident or Non Resident). 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-
- The individual has taken laon for acquistion of residential house property
- Value of the house should not more than 50 lakh.
- Loan taken by Individual for the purpose of buy a house should not be more than 35 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 bank/housing finance company
- For this purpose, loan should be sanctioned between 01.04.16 to 31.03.17.
Assessee can take deduction under Section 80EE on interest payable on home loan upto Rs 50,000 in A.Y.207-18 and subsequent assessment years till the loan is repaid.
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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.
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 5 years (3 years upto A.y 2016-17 ) 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.
(Republished With Amendments)
Author Bio
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.
sir what is the deduction on principal amt and interest amt from gross salary for assessment year 2015-16.
what is the maximum deduction for home loan interest for A Y 2016-2017
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)
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
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.
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.
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.
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
Weather VAT Paid can be claimed under 80C in Payment of principal amt
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.
Hi,
I have got the possession of my flat. After this I have sold it out. Can I avail the tax benefit.
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??
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
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
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.
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
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.
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.
Sir, I have taken a home loan while the property is registered in my mothers name only. Am I eligible for income tax rebate?
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.
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
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: https://taxguru.in/income-tax/income-tax-benefits-house-property.html#sthash.Q6Y0lVfU.dpuf
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
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.
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
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…
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!!!
is there any income tax exemption for purchase of house site?
is there any income tax emption for purchase of house site?
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
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
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.
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!
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.
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
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
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. ?
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?
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
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?
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
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.
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
Can you help me with the form to submit my declaration for Home loan Principal paid.
I only see a form for Interest paid.
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.
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?
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.
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
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.?