Now lets have more discussion in continuation of our previous related post.

1)      What are the tax benefits if I take home loan??

Ans: 1. Home loan borrowers are entitled to tax benefits under Section 80C and Section 24 of the Income Tax Act. These can be claimed by the property’s owner.

2. In the case of co-owners, all are entitled to tax benefits provided they are co-borrowers for the home loan too. The limit applies to each co-owner.

3. A co-owner, who is not a co-borrower, is not entitled to tax benefits. Similarly, a co-borrower, who is not a co-owner, cannot claim benefits.

4. Housing companies usually require all co-owners to be joint borrowers to a home loan. Loan providers specify who can be a joint borrower for a home loan.

5. The tax benefit is shared by each joint owner in proportion to his share in the house loan. It’s important to establish the share for each co-borrower to claim tax benefits.

6. The certificate issued by the housing loan company, showing the split between principal and interest for the EMIs paid, is required for claiming tax benefits.

2)      What are Income tax benefits of taking and repaying a housing loan under EMI Plan?

Ans: You will be eligible to claim both the interest and principal components of your repayment during the year.

• Interest can be claimed as a deduction under Section 24. You can claim up to Rs. 150,000 or the actual interest repaid whichever is lower. (You can claim this interest only when you are in possession of the house)
• Principal can be claimed up to the maximum of Rs. 100,000 under Section 80C. This is subject to the maximum level of Rs 100,000 across all 80C investments.
• You will need to show the statement provided by the lender showing the repayment for the year as well as the interest & principal components of the same.

3)       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.

Read Rest Of The FAQs here:

FAQ on House Property – Vol.I

FAQ on House Property – Vol.II

FAQ on House Property – Vol.III

FAQ on House Property – Vol.IV

FAQ on House Property – Vol.V

FAQ on House Property – Vol.VI