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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Hello,
I have taken home loan of 915000 and want to avail tax benefit, what are the documents which i need to submit for availing the benefit. I mean do i need to collect bills from the bank to which i am paying the EMI.
Thanks,
Sampath Kumar
Sampath,
You get a provisional certificate at start of financila year and actual certificate at end of the year from the bank to claim Tax Benefit.This certificate gives breakup of principal and interest.If you haven’t received ask from the bank.
Thanks a lot for the info Jitendra
Hi, Can i claim HRA as well as Int on Housing loan uner Sec 24 and Principal under 80 C if i am not staying in the constructed house. But i am staying in a rented house that is close to my office.Both the houses are in the same city.. but because i want to stay near to my office i have let out my constructed/purchased flat and staying near by to office for rent. Please suggest me the solution. I have a ready a case study where this kind was allowed.
clarification awaited….
Nagendar,
Yes you can claim HRA along with Loan Deduction.But there are one conditions which should be fullfilled.
Read my previous comments
During the Form C…i mistake and declared wrong amount in the Form C..and accordingly Form 16 prepared..
So i want to know what is care taken during the Income Tax Return….
Regards,
KC
Kiran,
You can file the correct ITR based on the documents you have.
interest on housing loan to be shown under which head in ITR I while efiling?
Also how does the income tax department verifies the information submitted in e filing of ITR I?
is there any need of attaching form no 16?
Prasad,
This benefit is shown under head “Income from house property” .
No there is no need to submit any documents in e-filing.
Jitendra: If I show under head “Income from house property”, should i show up the amount in negative like (-150000)? Please confirm… Thanks !!
Hi,
I am a co-borrower with my dad, on a home loan taken from HDFC on Nov 2011. we have started paying the installments, however my dad is paying the monthly installments. The flat is under construction in Allahabad (at my hometown), and I work in Delhi. The property would be ready for the possession by end of the yaear.
Can you please explain me, what amount can I claim for the tax purposes for this assement year ? would be great if you could also explain what can be claimed by my father.
Thanks in advance.
regards,
Abhash
Abhash,
Claim of tax benefits depends on the ownership in property.You both can claim interest deduction in the ratio of ownership.if its 50% then you can claim 50% of the total interest amount as deduction.However, do not that any interest payment during pre-construction period can be claimed only after completion of property.
Hi ,
we are planning to take a flat, we will get its possession after 4 yrs . its cost is 32 lakh. we are planning to take home loan for that . as Banks provide home loan upto 80 % only . i just want to know that how house loan can give me benefit for my Tax rebate.
Guddu,
You can claim for principal repayment upto Rs 1 lakh under section 80C and the interest of Rs 1.5 lakh p.a. under sec 24.
Dear Sir,
Kindly reply to my folloing queries.
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.
regards,
sumit mishra
Interest on housing loan to be shown under which head in ITR I while efiling? If I show under head “Income from house property”, should i show up the amount in negative like (-150000)? Please confirm…
Ram,
Yes.The house property income in case of housing loan will come negative if you have self occupied property.
please confirm
Can i get Tax benefit on Pre EMI?
Sunil,
You can avail of tax benefits on the interest component of the pre-EMI only after the construction is completed. But that doesn’t mean you will not get tax benefits on pre-EMIs at all. Once the construction is completed, you can show the pre-EMI interest payment in five equal instalments in subsequent years. For example, if the pre-EMI payments aggregate to Rs 5,00,000, then Rs 1,00,000 each can be shown over a period of five years for tax benefits.
However, you cannot claim any tax exemption on the principal amount, if any paid, in this period
With regards to your example, is this Rs. 1,00,000 apart from the Rs. 1,50,000 that I am can claim for each of those 5 years? In other words, will I get Rs. 2,50,000 exemption for the first five years?
Hi,
One query regarding tax benefit on housing loan under 80c and interest payment.
I have taken home loan on my name and I am paying the EMI of 25000/month for a house but I have made my mother(house wife no source of income) as owner of the property. Tax certificate has both our name but legally she is the owner. Can I take tax benefit under 80c and for interest payment.
Sumeet,
If you are not the owner of the property then you will not be able to claim the tax benefit.
Hi Jit,
Suppose If I have taken house on my spouse name and she is not working. In that case can i avail tax?
There is a provision in income tax for claiming tax benefit in case of spouse as owner.But do consult a CA for clerification on this as most IT officers do not allow it if it is done only for tax benefit purpose.
Sir, I have a housing loan for a housing plot (i havent started the construction yet) hence staying in a rented house, can i claim HRA and loan (principal & interest). Please guide.
Rashmi,
You cannot claim tax benefit on a plot.It has to be a house.
I have 2 home loans out of which, 1 would get fully repaid by end of the next month. I live in the same home.
If I decide to buy third house, by taking a fresh home loan – I will have 1 self occupied property which does not have any home loan on it AND 2 rented properties with home loans on each of them.
How does the taxation happen in this case? Do I get the benefit for (Rent – Corporation Tax – 30% deduction for maintenance – total interest ) for both these properties while computing tax?
And would I be liable to pay the wealth tax on it? If so, how it would be computed?
Umesh,
You need to consult a CA in this case.
I have obtained two different housing loan for purchase and construction on my allowted residential plot in Noida as detail given below :
Bank Loan Amount Remakrs
HFDC, Noida Rs. 3 Lakh Loan was taken for purchase of land from June,
2002 to June, 2010. paid compenent as follows:
Principal Compenent : Rs.2,45,107/-
Interest Compenent : Rs. 1,60,129/-
State Bank of India, New Delhi Rs. 20 Lakh For Construction on my said residential
plot from Sept. , 2010 onward for 20 years.
Interest has been paid to Bank till date :
Principal Compenent : Rs. 94,570/-
Interest Compenent : Rs. 2,37,480/-
The construction work has been completed in June, 2011 and I am living in said constructioed home.
Sofar I have not claimed any tax benefit on the repayment of above loans.
You are requeted to please guide me how I can avail the Tax benefit on my earlier loan inetrest and ongoing current loan. Which type of documents are required to submit for claim.
Please reply
thanks
Daljit Singh
Hello,
My husband and myself has taken a joint Home loan and home is also both are owner of home. We want to claim 50-50% tax benefit. but our office is demanding certificate from bank stating share of each borrower.Bank is not ready to furnish the same. Is it written somewhere in official website of income tax about this rule of tax benefit so that we can show it to our office??
Snehal,
In a joint loan you need to specify the ownership in the property documents itself.It becomes much easier to claim.The reason why office is asking this is that in a joint loan the tax benefit is claimed in ratio of ownership and not loan.
Thank you Sir
Snehal,
A clerification.
The tax benefit is claimed in ratio of the joint loan.This should be specified by the bank in the documents.Generally you should while taking the loan insist on the institution to add this details in loan documents.
Details about claim in joint loan is available on income tax website.
hi,
I have constructed a house. started living in.
The loan amount is 150000/-
Can i claim both Housing Loan repayment of Principal of 1 L and Interest 1.5L (total of 2.5L) tax exemption.
Regards
Arun
Yes you can
sir,
my husband and myself applied for home loan for 1200000/- and repaying monthly 14600/- as the total of principal and interest amount.
my husband is paying the repayment instalments fully through his saving a/c only.
can he claim the tax benefit fully as i am not a tax payer?
total how much he can get tax rebate?
LS Jamuna,
The tax benefit can be claime in ratio of ownership.Your husband can claim th efull by taking a written declaration from you for not deriving any tax benefit.
i have taken a loan of rs 34lacs for purchasing a under construction flat which has been booked in joint ownership of my father and wife.can i claim tax benefit
There is a provision of claiming tax benefit in case of ownership of spouse but not father.You will have to consult a CA for more clerification.
Dear Sir,
i have to purchased a well build house at my village whose cost is near to 300000 (3 Lakh Rupees)
if i taken a loan of 3 lakh to purchase this property then can I able to get ITR (principle 1 L + interest -1.5 L)total 2.5 L tax exemptions
As house is ready with construction.
Ravindra,
Yes you can claim if you are buying a constructed house.
Dear Sir,
I have already one flat bought though loan in 2003 onwards and i repaid all instalments and loan completed. Presently i am staying in that Flat.
I am planned to purchase another one flat by loan in another city (Chennai) which is in construction phase. The Flat expected possession shall be in April 2014. Shall i get IT rebate for the EMI payment. How it can be claimed? What shall be limit for that?
Kindly Reply.
Thanks in Advance.
Ganesan
Ganesan,
Any repayment of loan interest during construction period can be claimed after the completion in 5 equal installment in 5 years.However, the interest claimed is well within limit of Rs 1.5 lakh.You do not get any claim for principal repayment during construction period.
Thank you sir
Hi,
I booked a flat. Registration and formalities are completed.
Now I went to SBI bank and the manager says that there is differencr in Blueprint and description in Agreement.
Actually One of the bedroom was is not shown in Blueprint so bank says I looks like 1 BHK Vs 2 BHK mentioned in Agreement. I already informed the Builder and they are working on this.
Pls suggest if anything to be done from my end ?
Thanks,
Parag
Sorry My mistake in description -
Actually there is a bedroom infront of Kitchen and the front wall facing kitchen is not shown in blueprint for that bedroom …which reflects it as 1 BHK as per bank.
thank you sir
Hi Jitendra Solanki,
I have paid an interest of 1,20,000 in the last financial year towards my Housing loan. I am preparing to file returns towards my income tax. As you’ve mentioned, I will claim this money in 5 equal installments as this was part of pre-occupation interest.
I would like to understand from you as to what documents do I need to submit alongwith my returns so that my claim for interest towards Housing loan is accepted by the IT dept and I get the returns. I have papers related to my flat registration, sale deed copy, Bank Interest certificate. Do I need to submit the copies of these alongwith during the Income tax returns filing process? Please let me know.
Thanks,
Prasad
Prasad,
In e-filing you do not need to send any documents except ITRV which is generated.However, maintain all the records to ensure if any query is raised you have the proof.
I have taken the housing loan for housing plot and constructed only 1 small room. I have got the Bank certificate for Interested paid (mentioned as per IT ACT 1961 you can claim in 8oc and 24 section). I am doubt whether to claim or not as its plot but got the strong certificate from the bank.
Can u help whether I can claim?
Hello,
Would like to seek your views on the pre-emi interest reimbursed by the builder. In case the builder reimburses the pre-emi interest paid to the lender, would such reimbursement can be offset against the interest paid or is the reimbursement is treated as a taxable income?
Thanking you in advance
My father in law have house in his name .He has taken loan from bank ,now he is retired from service and he is not able to pay installments of house loan so his son is paying installments.May his son take the exemption from income tax.
P.N.Malviya,
If he does not have any ownership in property he will not be able to claim any tax benefit.
i have a home loan but i have given that house on rent, so in itr1 form where shoild mention the rent received,kindly help
You iwll ahve to fill ITR2 if you have any income from property.
I have taken loan of Rs.42lacs. Can I avail of the taxbenefits u/s 24 & u/s 80.
I am not living in the same city as my house , due to my employment. I am also getting HRA from my employer. Can I also avail of the theH HRA exemption benefit.
Jaswinder,
yes you can claim both.
I have a flat in Mumbai on which there is no housing loan. The loan was completed 5 years back. I work in Mumbai and stay in my flat there. Now I intend to buy one completed ready to move in flat in Coimbatore. The loan amount will be 35 lakhs. Can I get Income tax benefit on both principal and Interest part? I do not wish to give the new flat on rent. As my child is studying in a residential school in Coimbatore, I wish to stay there on vaccations or on their holidays. What should I do to get maximum tax benefit?
I have taken a home loan. House is complete and is rented out. I am paying the emi which has both principal and interest components. will i get rebate on both principal and interest component to the tune of 100000 and 150000 respectively
sir,
We my wife and i have taken home loan from sbi to construct a home on previously perchased plot. The ownership is in the name of my wife. We have taken a home loan jointly.
my wife also working in state govt. but she is not under the income tax slab.
Can i claim the deduction from house property in my income tax return form.
Reply soon.
Thanking you
vikas meshram
Dear sir,
Regarding hosing loan repayment during construction phase it was told by friend that pre-Emi amount can be considered for income tax exemption. What is Pre-EMI? How it can be availed ? Any restriction for that? If it includes Principal amount or interest.
Please explain to know more
Regards,
Ganesan
pls tell us our employees have taken the loan of housing up to 2.5 lakh , so pls tell me how much rebate will gate on principal and interest.
Regds
B.N.KATORE
Bandu,
On principal Upto Rs 1 lakh can be claimed under section 80C while on interest upto Rs 1.5 lakh can be claimed in a year.
Hi
I have recently purchased a house. It’s under construction and possesion is in next 2 years..Can i claim both HRA and housing loan interest if i am living in same location where i have purchased the new under construction house.
Hi
I have recently purchased a house. It’s under construction and possesion is in next 2 years..Can i claim both HRA and housing loan interest if i am living in same location where i have purchased the new under construction house.
Sunny,
Yes you can claim HRA benefits. However, housing Loan benefits during underconstruction period can nly be claim after you receive the possession and that too only the interest.
We have purchased newly constructed flat & registation is in my wife name but the Home laon from HDFC is joint & i am co-applicant. EMI is being paid from her salary.
Can we claim interst benifit as 50:50. If not, if EMI is paid in ratio of 50:50, can i avail benifit of 50% interest besides property is in wife name?
Dhanjay,
Income tax do have provision of claiming exemption in case property is in spouse name.IF EMI si paid form her account then you might not be able to claim it.Have the repayment from joint account then only you can claim any ratio.
I purchased a flat on August 2012 and I will be getting the possession on December 2014. So does this mean I can claim tax benefit only under section 24 (max of 1,50,000)? Please clarify.
Pradhan,
Any interest you have paid during the period if it was under construction, you can claim it after the possession.
Hello Jitendra,
Thank you for providing this information. So this means until I take possession, I can claim the principal amount (max of 1,50,000) only right?
Pradhan,
You can claim only the interest repayment of underconstruction period.
There is no provision of claiming the principal either during the period or after completion.
Hi
Can the registration charges incured for buying new apartment be declared to avail tax benefit? If so under which section
Siva Prasad
Stamp duty and registration charges paid for transfer of property qualify for deduction under Section 80C.
Nice post..you mentioned there is upper limit of 1.5L on interest deduction. On some online forum, I read that if you give house on rent, then you can show (interest paid – rent earned) as loss, and this entire loss is deducted from your taxable income. And this loss does not have any limit; meaning there is no cap of 1.5L on this loss. Now wondering what is correct information, cap or no cap?
Searching pune home,
Yes you ar eright.
FOR LET OUT PROPERTY, actual interest paid/payable can be claimed as deduction.
Thanks for your prompt reply, Mr Solanki. So for let out property (assume second property) if one takes a loan, and entire interest is deducted from taxable income…would it mean that the person would pay zero income tax? Is this at all possible? I think it still does not make much financial sense, you might be saving 30% on income tax, but you still end up paying interest to the bank.
Hi, We have bought a ready-to-move in home and staying there since May 2012.
House is on name of my husband, while I am co-applicant in home loan. EMI goes from my salary account. So How much we can claim to save IT, and whats best way to save maximum on tax, we both come under 20% bracket and has high basic. Thanks.
Vaishaly,
You are making wrong combinations for claiming income tax benefit.
For claiming any tax benefit you need to be a borrower of property either singly or with some share. If not then you cannot claim any tax benefit.However, income tax have a provision of benefits if property is bought on spouse name.But the taxman shoudl be convinved that thsi is not done only for tax benefit.
You both will be bale to claim your respective share only when you both are paying EMI.If EMI si going from your account then your husband will not be able to claim.Hence, first change your EMI outgo to a joint account.
You will be able to claim tax benefit in ratio of your loan only.So if it is 70:30 then teh tax benefit will eb in same proportion.
I am a salaried employee and taken personal loan from my relative for purchasing a house, can I avail exemption u/s 24, as interest paid on housing loan and also clarify to take deduction u/s 80 c regarding principal payment.
in short, if any body takes loan from his relatives for acquiring home, will he be eligible for taking dedcution u/s 24 & u/s 80 C
Dear Team,
Greetings,
I have taken House Loan of 30 Lakhs of which i will be paying around 3,50,000 per year.
Kindly let me know what is the Maximum amount i can claim tax exception for?
Also Please note that the house loan has been taken for buying a SITE and not building a house.
Please assist..
Dear Jitendra,
I have taken loan of Rs 14,90,000 /- in Indian bank and bought a plot , can i avail the tax benefit for this type of loan ? What documents should i ask from then Bank to submit in my company for IT declaration. Also is it possible to extend the same Loan for construction of House ?
Pls advise.
Thanks in Advance
Benny,
You cannot avail benefit from loan taken on a plot.Its only for construction of house.
Sir,
My form 16 says, Rs.58112 is my interest paid for my housing loan, u/s 24(I) (VI).
Investments such as LIC, PF etc come as Rs.101498, hence Rs.100000 is shown as rebate and relief under Chapter VIII, U/s 88. Can u please help me on how to enter these figures in ITR-1, excel utility. I mean where to enter Rs.58112 and 100000
Dear Sir i have taken home loan for purchasing the constructed house but nobody is residing in it. i reside on rent in same city.Can i take tax exemption under 80c, section 24 and HRA benifit.or to get these benifits the constructed house must be rented out….pl advise
“I have taken a home loan from Icici Bank for purchase of property, however my parents gave me money for the down payment, I pay interest to them for the amount of down payment, what certificate would I need to show my company so that they consider interest payment by me to claim tax exemption U/s 24. & can I claim principal repayment u/s 80″
And what if the company which I work for says that this is not possible do we have any incometax website which clearly states that you can claim deduction for interest paid to parents. Kindly let me know of the same as I it would be of great help to me.
http://www.dnaindia.com/money/report_home-loan-from-relatives-eligible-for-tax-claims_1504715
Shridhar,
You cannot claim under sec 80C for the loan taken from your parents. You can claim only the interest part.However, you should document this in writing clearly mentioning the amount of loan and repayment schedule.Good to register it for proof.
HELLO SIR I AND MY WIFE TAKEN A HOME LOAN OF 24 LAKH. I M IS THE CO-APPLICANT IN BANK DOCUMENT. AND THE REGISTRY OF HOME IS TO MY WIFE NAME. THEN CAN I TAKEN TAX BENEFIT IN MY INCOME.
Hi Mahendra,
Yes, Income tax allows deduction in case property is in name of wife only if the purpose of purchase is not only to claim tax benefit.
Hii sir,
I am working under the central govt. of india. now i want to take home loan for the construction of the home which is on the name of my parents. so if i wanted to be the co owner to claim tax benefits then wat do i need to do. will my parents write a will that will work? or is is mandatory to make a new registry on my name?
Dear Tarun,
The property has to be transferred in your name to get the loan benefits.Consult a lawyer.
I have taken hsg loan in 2009 for under construction flat at NOIDA and interest for three years has been accumulated Rs.360000/- and current year’s interest is Rs.100000/-. I have been handed over the possesstion of flat in this year i.e in Sept 2012. Please let me know the total interest exemption for this finacial year.
Regards
S.C.TANEJA
Hi Subhash,
“As per Income tax pre construction period means Interest up to the end of Financial year ,immediate proceeding to the year in which house is completed.
suppose loan is taken on Jan ,2008 and House is completed on 31.01.2010, in that case pre -construction Interest is taken from Jan 2008 to March 2009.
In above example ,even if House is completed on 31.03.2010 then also the pre construction Interest is considered From Jan 2008 to march 2009″.
So in your case you will be claiming Rs (360000)/5 as the interest deduction.
Dear Sir,
this year i had taken home loan interest is paying from january. already i claimed 80c and can i also avail sec.24 or not please let me know from which sections i can claim and what are the documents required for that
Shilpa,
Yes, you can claim under se 24 upto Rs 1.5 lakh if the house is fully contructed. You will need certificate from the financial institutions you have avialed the loan.
I have purchased a flat in mumbai costing amount Rs. 63,00,000/- where I am a owener and my wife is co-owener of the flat. Me & my wife both are working in private organisation.We have taken home loan of Rs.36,60,000/-, where EMI Rs. 37,134/- is deducted from my salary.Currently we are staying in the same flat.Now my question is what is the limit for me & my wife in case of interst and principle amount on which income tax rebale will be claimed.
Hi,
I have a self occupied house on which I am claiming annual deduction of Rs 1,50,00 towards interest paid on housing loan.
I am planning to buy a second house through another housing loan and give this property on rent. As I understand i there is no limit on claiming deduction on interest on rented out property.( To be claimed as loss on house property after deduction the rent recd)
My question is can I claim both:
1) Deduction of Rs 1,50,000 for self occupied house
2) Loss on house property for the 2nd house.
Jitender,
It can be claimed in the ratio of your loan.So if you are bearing 80% and spouse 20% of the loan then same ratio will apply in case of tax benefit.
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