FAQ On Housing Loan

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

 

First Equated monthly instalment (EMI) amount is to be divided into the principal and interest components.

 

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 lakh. The repayment of the interest portion of the EMI is also allowed as a deduction under section 24 under the head “income from house property” upto Rs.1,50,000/- for self occupied property and full amount in case of let-out property.

 

 

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 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. 1.5 lakh. 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. 1lakh 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. 1.5 lakh individually. 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– I 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.

  • Supriya

    I would like to start my own business as a sole properitorship. I would like to confirm that is it necessary to register the firm or not. If yes, then what are the formalities…My business will be just like trading means I will purchase from some party and will sold out to the clients or other party. Does this business require TIN/TAN no.? How to go for the same. Awaiting for your promot response. Thanking you in anticipation…Supriya

  • We have a Proprietorship Company in West Bengal.Our Companies turnover is around 12.50 crores for the year 2008-2009.We want to convert our company into Private Ltd Company.
    Please suggest us.

  • DHIRAJ PATHAK

    1. A & his wife are joint owners (shares not determinate) of a house property (deemed to be let out)

    2. Loan for the same is taken jointly by A & B

    3. Repayment of the loan is done from joint account of A.
    And A is demanding full deduction upto Rs. 100000/- u/s 80C & Rs. 150000/- u/s 24
    Where as his wife is also working with other company
    So, pls let me know that how to give deduction to Mr. A

    Please help me as it is very urgent case

  • Devakant

    Dear Sir,

    We bought a house in the name of my wife .We took loan of Rs 40 lakhs in joint name to acquire that house property . EMI of that house is going from my wife’s account .The certificate from Bank states name of both my wife and me. My wife is caliming exemption under sec 80 and 24 .Our EMI bifurcation is as follows –

    Principal portion – Rs 79,430
    Interest portion – Rs 4,32,465

    Now my question is can I also claim deduction under sec24 for Rs 1,50,000/- We can start paying thru joint account.

    The fact is that property is not in joint name but the laon is joint.

    Please advice me how can I go for this exemption.

    Thanks in advance.

    Regards

  • if my husband alone is taking loan, can we register the property in both of our names?

  • Narayanan

    Dear Sir,

    I have a house which is on my Fathers and my name jointly in Delhi. We have registered this house for 20 lacs and taken joint home loan from nationalized bank for 5 lacs for 10 years. Now can I re register the property on my wifes and my younger brother’s name plus whether they can apply for a joint loan to any bank thus 5 lacs outstanding with nationalized banking + additional loan of 10 lacs can be sorted as a fresh loan for the re registration purpose! Please help by clarifying

  • satheesh

    Sir,
    I have taken Rs.16,50,000 Home loan for individual house construction.But the land & all documents are in my mother name.the EMI amound taken from my account.
    Principle : Rs.20992
    Intrest: Rs.157772
    EMI: Rs.16665
    Let me know i can cliam for tax detuction or not.

    Regards
    Satheesh

  • SHYAM PAREKH

    We bought a house in the name of my wife .We took loan of Rs 5 lakhs in joint name to acquire that house property . EMI of that house is going from my account .The certificate from Bank states name of both my wife and me. can i get the exemption under sec 80 and 24 .–

    REGARDS

  • Indianist Online

    It is true that one can earn huge on tax benefit on home loan if you can understand the procedure properly. This money makes a huge difference in your total income for over years.