A house loan repayment has two components – principal and interest – and both of these components are treated differently for tax benefit calculation purposes.
The principal amount is covered under Section 80C and has a Rs. 1 lakh limit. In order to claim the tax benefit under 80C the house should already be constructed, and should be a residential property.
Tax Benefit of Home Loan Repayment
Section 24: Tax Benefit on the Interest On Home Loan
The interest on the home loan is treated differently, and Section 24 deals with the tax aspect of the interest on house loan repayment.
The maximum limit under this section is Rs. 1,50,000 and you don’t have to actually live in the house to claim this benefit.
The interest payment is deducted from your taxable income and thus reduces your tax liability. There is no limit on the number of houses you can claim this as well as the location of the houses. The only limit is Rs. 1,50,000 on the whole amount.
There are special conditions like when you get the loan disbursed before the construction of the house and pre – EMI interest and Raag has covered these aspects in a lot of detail in his post about tax benefits of a home loan which you can read if you were interested in those details.
Correction: An earlier version of the article stated that the 80C deduction is only available if you are living in the house. CA Karan Batra notified me that you don’t have to live in the house to claim deduction. Apologies for the mistake.
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Sir,
The plot is in my wife’s name and I took a home loan and repaying the EMI. My wife is co-applicant in this home loan. My wife is filing ITR for other sources income only.
Will I get the full Housing Interest Rebate on this house even I don’t have ownership/joint ownership in this house.
Ramesh,
You do not get home loan benefits on buying a plot.Its only the house on which you can claim tax benefits.
Agreed Sir,
I purchased the Plot in my wife’s name but from my income and took home loan from bank for construction. EMI is also paying by me only.
Further my wife is filing ITR for Other Sources income and doesn’t have any other income.
Whether I am eligible for the Rebate of Housing Loan interest, in view of clubbing of income.
Ramesh,
Clubbing of income does not apply in home loan. If property is not on your name then its difficult to claim any tax benefit.You need to be a co-owner in it.
dear Sir,
i donot have the income tax return copies so can i get the home loan still.
my salary is 27k.
kindly advise.
thanks & Regards.
Devendra
i am 3/4th share holder of the property. but i am the only one who is repaying the loan as well as the interest on the same. i get the claim of whole of the interest on this housing loan.
Rajan,
Yes you can claim interest by taking declaration from other holders that they are not claiming any tax benefit.
can i get the claim for whole of the interest.
Allotted flat in December 2006. Construction completed and possession in August 2012. Can I claim tax benfits for the interest on housing loan for the pre construction and post completion period now ? If so what are the limits?
Devarajan,
Yes interest during pre-construction period can be claimed in five equal annual installments once you get the posession.However, it will be under the limit of Rs 1.5 lakh only.
Thank You for the reply. Please note that the first installment of Home loan was taken in December-2006 and last installment in 2010. Period of completion is about six years from first installment and two years from the last installment of home loan. I propose to rent out the home. Please advise accordingly for this type of situation.
URGENT- The house is owned by the father, the housing loan is given in the joint names of father and son considering the income of the son. The son repays the loan. Whether tax benefit can be given to the son eventhough the house is not owned by him but housing loan is opened in the joint names of father and son
Sandhya Someshwar
Sandhya,
No, if the property is not in the name of the son then the assessing officer may not allow the tax benefit as one need to be owner or co-owner in the property.
Is there no tax deduction on loan taken for acquiring land?
No
sir,
Our house is in my dad’s ownership, rules of area are he can not sell or lease for 10 years, now its 6th year. We want to construct first floor, I am working, and want to take loan and claim tax exemption, kindly suggest me what can be done?
Thanking you
Do you have article, how Pre-EMI has to be included in the tax benefit ? Is that something, after construction is over or even before(pre-EMI) has to be claimed. I know, vaguely, it is divided into five equal installments of five financial years. When does it starts ? After the hand-over of home(in that financial year)
Sunder,
Tax benefit starts when you have got the possession of your house.
i have taken a Housing loan of 4000000 for construction of my house for 5 years.i have taken the loan on 05/06/2012 ,am i liable to get tax benefit of 150000 every year till my loan remain as payable ……will i get the deduction of 150000 for 5 years…?
Mavila,
The deduction of R 1.5 lakh is available when your house gets constructed.Any repayment during preconstruction period can be claimed in 5 equal installment when the construction gets completed.However, this benefit is within limit of R 1.5 lakh.
Sir,
We have plot on my Mother name and she is 60+ age, i want to take home loan for it’s construction as i m salried person.
How Can i get the rebate on home loan if i will pay the premium.
Regards,
Anil Gupta
Anil,
You should be a co-owner or owner of the property to claim the tax benefit.
I feel that the Rs.1,50,000 is not the ceiling if Second Housing Loan is taken to purchase a house and the second house is rented out . For the second house , there is no ceiling , even if the interest component goes beyond 1 .5 Lakhs
Yes Mr.S.Antony, on second house one can claim the deduction without any limit.
Dear Sir,
For a financial year , If the total interest payment ie. post possesion period interst and 20% of pre-possession period interst becomes more than Rs 1,50,000 , then whether this amount will be limited to Rs 1,50,000 itself for income deduction purpose?
Yatinder,
Both combine pre and post construction you can claim upto Rs 1.5 lakh.
Hi,
Property is in both wife and husband name. Home loan taken on husband name with wife as co-applicant. Can both avail for tax exemption (50% each of loan interest)?
EMI is deducted from husband’s account, wife transfers 50% of EMI amount before ECS debit date. Is this fine? or should they hold a joint account and transfer the ECS debit to this account?
Regards,
Gauthaman
Gauthaman,
Both can avail the tax exemption in ratio of ownership of property.The best way to claim deduction is from a joint account or distribute EMI payments in case of individual account.
Thanks for your suggestions. Will take the necessary step
Regards
Gauthaman
Gautahaman,
A correction here.
You avail tax benefit in a joint loan in ratio of the loan.So if you have both have a 50% ratio in loan then each of you can claim 50%.
Hello Sir
I am planning to purchase a plot in bangalore. Please advise if i have go for a plot loan or buy the plot and then go for home loan during construction. I also want to know if the tax exemption are available for plot loans.
Harsha,
Tax exemptions are available only for construction of house and not for plot.
My son is working in a govt sector purchased a house on his wife name in the year 2002.Recently he purchased a flat by taking a loan in the bank and paying an EMI of Rs 16,500 pe month.Is he eligble for tax exemption on loan amount.
Thanking you,
S.Babu
Dear Mr S.Babu,
Yes he is eligible for the tax exemption on the loan amount if he has the ownership of the flat.
Dear Sir,
I have a house which is rented out.
thereafter i booked second home for which possession is obtained and i plan to shift in it in coming months. Now Can i treat 2nd house as self owned and notionally rented out, for the purpose of getting IT Tax benefit on home loan interest without any limit ( ofcorse after deducting notional rent income) ?
Yatinder,
Yes you can treat that house as self occupied.
dear sir, i have purchased a flat with my spouse as joint owner. The approx yearly interest component paid on home loan is 4.5 lakh. Whether 1.5 lakh limit shall be applicable individually for both of us or the same shall be divided b/w both of us. please give ur expert advise.
Dear Sumit,
If you have taken a joint home loan then you both can claim Rs 1.5 lakh seperately in proportion of your ownership.
sir,we purchased a flat in joint ownership and paying an interest of 6lakhs an year for the housing loan.whether we can claim both individually 1.5 lakhs each tax exemption.or only 75000 each.please advice us
Jacob,
If its a joint loan then both of you individually can claim upto Rs 1.5 lakh in the ratio of ownership.
Thanks for your reply. I am staying in house property owned in my name which i have let out to my company and getting self-lease every month. For this property balance loan amount was paid in Jan 2012. Recently i have purchased another ready built flat with my spouse as joint owner. which shall be let out on rent. The approx yearly interest component paid on home loan is 4.5 lakh.
1. Wherther 1.5lakh limit is still applicable for both of us or total yearly interest(4.5lakh) shall be divided b/w us in proportion of ownership.
2. Income/loss from house property shall be calculated considering both properties.
3. Please provide any ready-calculation/ article for calculating house income.
dear sir,
ur reply is awaited..
regrds
sumit mishra
Jitendra,
I am confused a bit in e filing the TAX. I have Home loan and got possession now want to get rebate on the interest. Now which sheet should I fill ITR1 or ITR2. ow if it ITR1 then where should I specify the amount over to which I want to file rebate.
Regards,
Prashant
Prashant,
For getting the house loan exemption income from house property need to be calculated.
Consult a CA.
Sir I am paying Income tax on a income of 4 Lakhs after LIC, Ifra bonds, Mediclaim & NPS and I have a housing loan 15 Lakhs paying interest around 2lakhs per year kindly calculate my taxable amount after deduction.
You will have to approach a CA for doing that – there are far too many variables involved in that and it can’t be calculated like this on the comments section of a blog.
Hi ,
I have got married recently and my wife have already bought a apartment with her name in home loan.
She is salaried when purchased the apartment and started claiming the home loan in tax benefits . But she is now planning to quit the job, in this case can i claim the home loan for tax benefits ?
If no is the answer . Are there any suggestions how to claim the tax benefits in my name for home loan.
Home loan details :
Tenure – 15 years ( 2years already completed in repaying EMI)
we are already in possession in the apartment .
Home loan in my wife name .
Rajesh,
you can claim the tax benefit if you are co-owner in the property and jointly taken the loan.
Hi,
I have taken a home loan. The property is in my name. Now can I add my wife as co-applicant and get the home loan transferred. The property is in my name only. Do I have to do something to change the property under both of our names.
Please do help me..
Thanks & Regards,
Senthil
Senthil,
Consult a lawyer in this matter who will be able to gudie you more wisely.
Hi there, If I buy home but still continues to stay in the rented flat, do i get benefits of both ? ie. deduction of 150,000 (interest component) from my taxable income AND at the same time, HRA benefits (house rent allowance) ? Thanks, Jignesh
Shah,
Yes you can claim but there are some conditions attached to this which you need to factor in before claiming for any exemption.
I have taken a housing loan and brought a house and I am living in the same. The housing loan was closed as of last year. I am planning to buy another house in the same city where I have the first house , what are benefits of loan now. My first is obviously comes under self occupied. The second will be rented out. How do i go about declaring this houses in IT.
You advise/suggestion would be highly appreciated.
-Suresh
Suresh,
You can claim tax exemption on loan taken for second house without any limit.The rent received will be included in your income on which you can claim a standard deduction of 30%.
Hi
I have received the form 16 from the employer and missed to delcalre the interest on house loan amount. While filing in the IT returns, is it possible to add the interest amount so that my net taxable income reduces? I didnt find a Section 24 (which is for the interest towards the home loan) in the IT return form.
Please help.
Thanks in advance.
Subrat
Subrat,
Yes you can do it.It is calculated under section “Income from house property” .
Dear Sir,
is offer letter from builder for taking possession of house is sufficent for claiming home loan interest benefit or the date of actual possesion of the house is material to commence the benefit of home loan interest ?
Yatinder,
The actual date of possession is important to claim the tax benefit on housing loan.
Dear Sir,
My wife & my self jointly got an apartment from by a will executed by my deceased father-in-law. We want to sell it and purchase another apartment in the name of my wife. Extra amount needed for new purchase shall be obtained by a Bank/ LIC loan. I shall be the co-applicant and I will repay the loan as my wife is not working. I already own 2 houses in my name and paying EMI for the same. I am an IT asessee and my wife is not, being a house wife. My question is :
1. Whether any capital gains tax is liable to be paid for sale of the house ( either by myself or my wife) .
2. Whether any tax benefit can be availed for the proposed new house ( in the name of my wife) .
Mr>ramana,
Yes, the capital gains arises in case of inheritence also.The cost of acquisition in this case will be taken as the cost at which your father-in-law purchased it.
2.If house is in your wife name you cannot claim exemption unless you are a co-owner in the property.
I and my wife are joint owners of the land and taken a joint house loan from SBI. But the EMI repayment is done fully by me. She is also salaried, but she is not claiming income tax benefit out of this loan. Please let me know whether I can claim full tax benefit out of the interest and principal repayment?
Mr.Mansoor,
Yes, you can claim the fill exemption.Your wife will have to give a declaration in writing that she is not claiming any tax benefit.
Dear Sir,
We are residing in a house from past 21 years without any loans now we need to renovate while staying in house, and i am planning for home loan will i be able to avail tax benefit where 4 of our family members are owners to the property?
ChadrPrakash,
You can claim deduction up to Rs 30000 p.a. on this loan.
I have not shown Housing loan details to my organisation and hence the details are missing in my Form 16. However I’ve all details (especially statement from housing loan provider) now.
I am still eligible to submit these details and re-calculate my taxes during IT filing?
Your response would be of great help.
Regards
Karthik
Karthik,
If you have missed the information in form-16 you can claim it during ITR filing.
I bought plot and constructed house in it now I am getting 150000 tax benefit on interest component. If I construct 1 or 2 house above my home with separate house loan for renting purpose, Will I get tax exemption on the interest paid towards 2nd home loan?
Regards,
Shodhan Kini
Shodhan,
Since the ocnstruction will be on the same property you won’t get full exemption.However, you will be able to claim exemption upto Rs 30000 available for for house repairs /improvement.
Hi,
Just like Karthik I did not show the housing loan details while declaring the income, and now I’ve I quit from the job. I received the Form 16 from my employer and it does not contain the details of housing loan principal repayment. The property is in the name of my father but the loan was granted considering my salary too. The provisional Interest certificate from the Bank includes both of us names. I’ve paid the 70 % of the EMI via cheque or cash payments (not interested in tho’). After I got the SB account number (Father’s) registered online, I’ve transferred it via my salary account. The Housing Loan account number is different from this though both are from the same bank.
Can I show the amount transferred to my father’s name and file the return? If yes, can I submit the monthly statements showing the transferred amount.
Thank you!!
Sunil,
Transferring the money to other account is not granted any tax exemption by the income tax department.Also the loan can be jointly, but if the property is not in your name you won’t be able to claim tax exemption.
Hi Jitendra Ji,
I want tax rebate on house loan interest, (house self occupied) which ITR do I need to fill? ITR-1 or ITR-2? And which section Do I need to fill this in ? Is it income from house property?
Manohar Rawat
Manohar,
You need to fill it under “Income from house property”.If you have only one property then ITR 1 is the right form.
I want tax rebate on house loan interest, (house self occupied) which ITR do I need to fill? ITR-1 or ITR-2? And which section Do I need to fill this in ? Is it income from house property?
Maulik,
You need to fill it under “Income from house property”.If you have only one property then ITR 1 is the right form.ITR 2 is used for more than one property.
Hi,
I have taken a home loan against a 3 bhk flat around 4 years back.
I bought this flat from builder in pre-launched. Now I have done the entire payment (except stamp duty & registration) of my flat and got the possession.
When I am asking to get home loan rebate (on principle & interest), my employer is asking me to produce registered sale deed agreement.
Since all the flats are not completed yet I am unable to register my flat.
I wanted to know that is it really mandatory to have sale deed agreement in order to get income tax rebate on home loan. if yes do i have any alternate?
FYi. I have all documents except registered sale deed agreement i.e bank loan sanction letter, sale agreement, possession letter, Bank certificate for re-payment.
Many Thanks,
Deepak
Deepak,
The property is not counted in your name till you register it.That’s the reason you are not able to get any tax rebate.
Hence, you will have to first pay the stamp duty, register it and then claim for the tax rebate.
Dear Sir,
I had purchased a house in Sept.2002 after taking loan from Bank. I am getting IT rebate on the loan amount (interest + principal). Around Rs.35,000/- on interest portion.
In 2010, I have purchased a flat after taking loan of Rs.20.0 Lakh from LIC. I have paid Rs.1.65 lakh on interest portion this financial year.
This financial year (2011-12), I have paid around Rs. 2.0 lakh on interest part Housing loan of LIC & Bank.
Now, I am having one house and one flat. One house, I have given on rent basis and getting Rs.25,200/- rent per year.
Sir, Please tell me how much rebate will I get on interest portion of loan Rs.1.5 lakh or more than Rs.1.5 lakh. I have paid more than 2.0 lakh income tax this financial year (2011-12).
Please reply my queries Sir,
Many Many thanks
nk sahu
Sir
I am eagerly awaiting your reply.
Thank you,
nk sahu
NK Sahu,
When you have two houses one is treated as self occupied and you can claim Rs 1.5 lakh interest on it.On second house you can claim housing loan tax exemption without any limit i.e. the entire interest.Hence, you will be able to claim Rs 2 lakh in your case for both the houses.
Sir
I have following queries by seing your blog..
1. If you going to fill your ITR by efiling mode than there is no need togive any documents than how income tax department come know that at what date you got possession with resistration ?
2 I have two houses and both are rented while I am living in govt quarter so do not get HRA in salary. In this situation which ITR form need to be fill for ITR ?
3. One house is with my name and other flat is resistered with name of myself and my spouse. In resistration share of parnership is not defined. Whole EMIs(of both houses) are paid by me. Now My wife has started to work as private teaching but she is earning only 50000 RS per years and she is also going to fill ITR from this assessment year. She will not claim any intrest benifit. Can I get intrest lost benifit for both houses ? Even my wife is co-applicant in one flat, can I claim 100% intrest loss for that property as I am paying 100 % EMI ? What is methord to convey to ITD as I am going to opt effiling process ? Pl suggest best way in which I get maximum benifits.
4. As you know that we could not rented both houses through out 12 month because of 11 month aggement we are generally doing. So practically we got 10 to 11 month rents. How it can be reflected in ITR form ?
5. I requasted to go through the HP(House property) schedule of ITR-2 and suggest how to fill as per my above situation.
6. Can I get benifit intrest loss of 300000 by both ITR(my & my spouse) as per above situation ?
P l reply urgentaly as last date for filling up ITR is 31 July,2012.
Regards
Hi sir,
I am living in Pune whereas my wife and children are living in Bangalore. We have a house at Pune and recently bought a house at Bangalore. Both the houses are reigstered on our names as co-owners. The annual interest paid on Pune home loand is about 1.5 lacks and 6.5 lacks for Bangalore home loan.
On Pune house, I am claiming IT benefit of interest paid on it as owned house.
On Bangalore house, can we both claim income tax benefit on the interest paid? Our share of finance is 70: 30 between myself and my wife.
If yes, can I show Bangalore house as deemed rented house (as I stay at Pune), whereas my wife (who is staying in the house) show it as owned house? In such case, can I be allowed to claim IT benefit on Bangalore house as second house, where as the same is owned house for my wife?
please clarify
thanks
Nagarju,
You can clam tax benefit on second house without any limits.One of your house will be self occupied and other will be deemed rented.However, as co-owners you can claim in the ratio of ownership only.Also, the same house cannot be shown as self occupied by one and deemed rent by other.
Nagarju,
A clerification for you.
Co-borrowers, who are also co-owners, are eligible for tax rebate in the proportion of their share in the loan. So, a couple can be equal owners but if their share of the loan is in the ratio of 60:40 or 70:30, the tax benefits would be shared in that proportion.
Sir/Madam,
I bought a new flat this year and possessed the flat on 1st July, 2012. The flat is regestered. I was planning to buy a 2nd flat. Shall I get tax exemptions on two flats ? What are the options ? If there are two home loans from two different banks are both tax free ?
Abhinash,
On one flat which will be counted as first, you can claim interest deduction of Rs 1.5 lakh only while on second house you can claim without any limit.
After calculation, I get to know that I have to pay tax. So in challan 280, which type of payment should I have to select? ” Self Assesment (300) or Tax Regular ASsessment(400)?
Sir,
pl clarify the followings:
1. I have taken a house in co ownership with wife. First name of my wife and second my name. Ratio of share not deffined in deed.
2.Taken house loan in my account although wife also coborrowers but i am main borrower as i have income.
3. presently i was taking home loan benifit and paying EMI.
4. Now I want that I should pay rent to wife for the same house and claim house rent deduction. Further, my wife will show rent in her return.
5. Wife will pay amt of EMI to me and i will pay tp bank. then whether wife can claim deduction of interest.
6. whether ownership of house can be shown in booksin the name of wife assuming that i home loan was taken for wife.
Kindly suggest.
Thanks in advance
I am staying in house property owned in my name which i have let out to my company and getting self-lease every month. For this property balance loan amount was paid in Jan 2012. The same is free from any loan. Recently i have purchased another ready built flat with my spouse as joint owner. which shall be let out on rent. The approx yearly interest component paid on home loan is 4.5 lakh. Can you please confirm the following.
1. Wherther 1.5lakh limit is still applicable for both of us or total yearly interest(4.5lakh) shall be divided b/w us in proportion of ownership.
2. Income/loss from house property shall be calculated considering both properties.
3. Please provide any ready-calculation/ article for calculating house income.
My father has taken loan for a flat and also flat is in my father and mother’s name, but the EMI is been paid by my brother. now as he is paying EMI he is not able get benefit in Tax.
Can you please suggest what we could do, can we transfer the loan in his name, also if we can transfer the flat in his name but we do not wish to pay huge amount for flat registration.
Thank you
Rinu,
Loan does not get transfer unless the ownership is in his name.In your case, your brother name will ahve to be included to claim tax benefit.
We have a house in the name of my father who was expired few years back. I wanted to buy with the consent of my brothers/sisters. Can I get Home Loan from bank? Can I get benefit in Income tax for Interest on Loan?.
Subha,
Your case i sof succession where you are one of the legal heirs.I do not think you can avail home loan unless you are buying it.For more clarification consult a lawyer.
SIR
I AM CONSTRUCTING HOUSE ON MY WIFES PLOT. I AM THE GUARANTER BECAUSE SHE IS HOUSE WIFE. IHAVE TO PAY FULL EMI. CAN I CLAIM FOR TAX BENEFIT. IF YES PLS TELL THE PROCEDURE OR IF NO HOW TO GET THE BENEFIT
I AM CONSTRUCTING HOUSE ON MY WFES PROPERTY. FOR THAT I HAVE TAKEN LOAN FROM SBI AND I AM PAYING FULL EMI. SHE IS HOUSE WIFE. HER INCOME IS ZERO. SO SBI TAKEN ME AS A GUARANTEER . CAN I GET THE TAX BENEFIT.
Hello
I am planning to buy a flat for 60 L in Bangalore and use it for 10 years and sell the same after 10 years. I am planning to buy this on full bank loan for 10 years. Please reply how do I compare cost of the flat after 10 years and how much loan (interest + principle amount) i will be paying in 10 years in today’s interest rates. These numbers I want to compare with expenses of house rent for 10 years in Bangalore. Please reply and guide me ASAP.
Thanks
Prabhu
Dear sir,
I am taken a home loan for construcion of home on my own name in the month of May2011 and costruction started, mean time i have paid monthly interst without principle amount, and construction complited in the month of May 2012, and given complition certificate to the bank. So i want to known how should i get the tax benifit on interst paid.
Deepak,
Interest paid during pre-construction period can be claimed in five equal installments once you get the possession.So if you have paid interest of Rs 1 Lakh, you can claim Rs 20000 every year fr next five year when the construction gets completed.However do remember that this is within the limit of Rs 1.5 lakh under sec 24.
I have taken residential land purchase loan in July 2011 and started construction on the same in April 2012. Can I calim rebate for interest & principal repayment on resident land purchased ? Please guide me for the same.
Thanks
Naveen,
You cannot claim deduction on purchase of land.
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