Monday, 9 February 2015

TAX ADVANTAGE ON HOME LOANS

 TAX ADVANTAGE ON HOME LOAN

Q.   Can I TAKE ADVANTAGE OF TAX BENEFIT FROM A HOME LOAN AS WELL AS CLAIM House rent allowance(HRA) ? 

A.    If you took a home loan and are still living in a rented place, you will be entitled to : 
Tax benefit on principal repayment under Section 80 C 
Tax benefit on interest payment under Sec. 24 
HRA Benefit. 
Of course, you can claim tax benefits on the home loan only if your home is ready to live in during that financial year. Once the construction on your home is complete, the HRA benefit stops. If you  took a home loan, got possession of the house, having rented it out and stay in a rented accommodation, you will be entitled to all the three benefits mentioned above. However, in this case, the rent you received would be considered as your taxable income

Q.   I have a Home loan in which I am a co applicant. However, the total E.M.I.  amount is paid by me. What is the total income tax exemption that I can avail of?

A.   Yes, you can claim income tax exemption if you are a c applicant in a housing loan as long as you are also the owner of co owner of the property in question. If you are only person repaying the loan, you can claim the entire tax benefit for yourself (provided you are an owner or co owner). You should enter in to a simple agreement with the other borrowers stating that you will be repaying the entire loan. If you are paying part of the EMI, you will get tax benefit in the proportion to your share in the loan. 

Q.   I have two housing loan on two different properties. can i get tax rebate under Sec  80 c of both the loans.

A.   Yes, you can get the 80 C benefit on both loans. However, the total amount that you will be entitled to will be a total Rs. 100,000 across both the homes. 
The interest paid on a home loan is not directly deductible from your salary income for either of your flat loans. Income from house property will be calculated for each flat you own. If either of theses calculations shows a loss , this loss can be set off against your income from other heads. 
As for section 24 deduction, on your self acquired house you can take advantage of interest payment upto Rs. 1,50,000/0  For the other property, you can claim actual interest repaid, there is no limit for the same. 

Q.   I live in Delhi in my own house.  In 2007, I took a housing loan to fund the purchase of an under construction flat in another city( Faridabad which comes under national Capital Region of Delhi but otherwise fall in Haryana). It is expected to be completed in FY 13.  I have not claimed any tax benefit so far. What happens to the loan installments I have paid so far? Can they also be claimed for tax benefit. 

A.   According to the Income tax Act 1961 where the property has been acquired or constructed with borrowed capital, the interest payable on such capital for the period prior to the year in which the property has been acquired shall be allowed as deduction in five equal installments beginning from the year in which the property is acquired. Thus, the interest included in the loan installment paid by you during the construction period shall be eligible for deduction from the year the which the flat is acquired/construction is completed. 
The principal amount of the loan repaid till date shall not be available as a deduction under section 80 C till the time the construction of the flat gets completed. Once the flat is completed and the possession is handed over to you, you will be eligible to claim deduction for interest paid on the loan under sec. 24 (b) and principal amount of loan under sec. 80 C. The total amount of deduction available under Section 80 C shall be limited to Rs. 1. Lakh. Thus as of now, you are not eligible for any tax benefit on such loan repayment. 

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