Conversation between Krishna and Radha
Radha: Krishna, can we buy a new house for us.
Krishna: Sure, but this year I have to invest to claim tax benefits so we can think about this next year.
Radha: Oh Krishna, it seems you don’t know about tax benefits from loans taken for house property.
Krishna : Really?
Radha : Yes
Krishna : So then tell me what are the benefits from a housing loan?
Radha : Let me give you an overview then we will go into each provision later.
Krishna: I am listening
Radha : House loan repayment consists of two parts 1. Principle and 2. Interest repayments
-Principal repayments get deduction u/s 80C up to 1,50,000
-Interest repayments get deduction u/s
-
- 24(b) up to 2,00,000 in case of self occupied
- 80EE Maximum – 50,000
- 80EEA Maximum – 1,50,000
Krishna : Oh my god this much we can save from housing loan then what is the need of investments in others.
Radha : Do not celebrate early to get these deductions we need to satisfy some conditions, let’s see those first.
Krishna: Let’s start.
Radha : under section 80C – Assessee can claim principle payment as deduction as well as stamp duty, registration fee and other expenses related to purchase of new house.
Interest payment as deduction :
1. Section 80EE:
Conditions :
1. Loan should be taken in the p.y 2016-17 .
2. Value of house ≤ 50,00,000.
3. Loan ≤ 35,00,000.
4. Assessee don’t have any other house property.
5. Loan should be from a Financial Institution.
6. Maximum deduction – 50,000.
2. Section 80 EEA
Conditions :
1. Loan should be taken between the years 2019-2022.
2. Stamp duty value ≤ 45,00,000.
3. There is no limit on loan.
4. Maximum deduction 1,50,000.
5. Loan should be from a Financial Institution.
3. Section 24b
Conditions:
1. There is no limit on loan & property value
2. Loan can be from any source ( eg: loan from relatives, friends etc)
3. Loan can be any type eg: personal loan, business loan etc… but used for the construction or purchase of house property
4. No condition on existing house property
5. But maximum deduction allowed for self occupied property is 2,00,000 (Including all properties)
Radha: Did you get it?
Krishna : Yes, but I have some questions?
Radha : Ok, fire me?
Krishna: This is related to 24(b) section. If I take a loan as joint property is a deduction 2,00,000 for both ?
Radha: NO, each co owner gets 2,00,000 deduction.
Krishna: loan from relatives also allowed in 24(b) can we take cash loan?
Radha : yes, but up to 20,000 because some other sections have penalties on cash loans exceeding 20,000.
Krishna : if house property is used for let out purpose in this case also we will get maximum 2,00,000 as deduction?
Radha : No, there is no limit in case of let out subject to conditions like construction has to be complete before 5 years.
Krishna: Deduction under section 80EE & 80EEA time limits we already missed so if we start now we can take only deduction u/s. 80C & 24(b) is it right?
Radha : Yes, You are absolutely correct.
Krishna: Thank you Radha.
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