Almost everyone wants to own a house. An own house not only gives you that sense of pride but also provides financial security to the family. However, with real estate prices at elevated levels, it is not easy to purchase a house outright. Most people rely on home loans to own that dream house. And they have huge EMIs to take care off too. A big EMI can put huge burden on your monthly cash flows. Fortunately, the Government, in order to incentivize purchase of houses, offers certain tax benefits on repayment of home loans. These tax benefits reduce your EMI burden to some extent. In this post, I shall focus on such tax benefits associated with repayment of a housing loan.
Tax Benefits on Home Loan Repayment
On Principal Repayment up to Rs 1.5 lacs per financial year
You can avail deduction up to Rs 1.5 lacs per financial year towards principal repayment on housing loan under Section 80C of the Income Tax Act. Do note that this cap is for the entire 80C investment basket.
On Interest payment up to Rs 2 lacs per financial year (Self-Occupied)
You can avail up to Rs 2 lacs per financial year towards interest payment on home loan under Section 24 of the Income Tax Act. The actual deduction allowed will be lower of actual interest paid and Rs 2 lacs. This is for a self-occupied house.
Suppose you have taken a home loan of Rs 50 lacs at 10% p.a. for 20 years. EMI is Rs 48,251. In the first year of repayment (assuming it is aligned with the financial year), you will pay total interest of Rs 4.96 lacs and repay Rs 82,737 of principal amount. You will be able to avail tax deduction of Rs 2 lacs for interest payment and Rs 82,737 for principal repayment in the first year.
Are other expenses relating to house purchase eligible for similar tax benefits?
Stamp duty and registration charges are eligible for deduction under Section 80C. Tax benefit for payment of such charges can be availed only in the year you make the payment.
Apart from this, any processing fee for the sanctioned loan, service fee or any prepayment charges is eligible for deduction under Section 24 of the Income Tax Act.
Any there conditions for availing these tax benefits on home loans?
Yes, there are certain conditions to be met before you start availing income tax benefits.
- You can avail these tax benefits only after taking possession of the house (or after the construction of the house is complete). So, there are no tax benefits before you get the possession (or for an under-construction property.)
- If the construction of house is not completed or the house is not acquired within
3 years5 years from the end of financial year in which the loan was taken, the tax benefit for interest payment under Section 24 shall come down to Rs 30,000 (and not Rs 2 lacs) per financial year. For instance, if you took the home loan in July 2018, you should get the possession of the house before March 31, 2024 in order to avail maximum tax benefit for interest payment. - Additionally, these tax benefits are only for the loans taken for construction or purchase of a house. For any loan taken for repair, renewal and reconstruction, there is no tax benefit on principal repayment. The tax benefits on interest payment under Section 24 for such loan shall be limited to Rs 30,000 per financial year.
What about the principal repaid or the interest paid before taking possession?
As mentioned before, you do not get any tax benefit for an under-construction property. So, what about the repayment done before you get the possession (or before the construction is complete).
The interest payment made before the financial year (in which the house was acquired or construction completed) can be aggregated and claimed as deduction under Section 24 in five equal installments over the next five years (starting from the financial year in which the possession is taken).
Please note this relaxation of tax benefit on interest payment is only for loan taken for purchase or construction of house. If the loan is meant for repair, renewal or reconstruction, there is no such tax benefit.
On the other hand, there is no recourse for principal repayment made before the year of possession. There won’t be any tax benefit for such principal repaid.
Suppose you took a home loan (Rs 20 lacs, 10%, 20 years) in July 2012 and get the possession only in January 2015. EMI for the loan is Rs 19,300. From July 2012 till March 31, 2014, you would have paid 21 EMI installments. In these 21 installments, you would have paid Rs 3.45 lacs of interest and Rs 60,170 of principal amount. The interest amount of Rs 3.45 can be divided into five equal parts (Rs 69,028) and claimed as deduction five successive years starting FY2015 (FY2015 to FY2019). There is no such recourse for principal repayment. Since the house got completed in FY2015, you will get regular deduction for interest payment and principal repayment from FY2015 onwards. In FY2015 (till FY2019), you will get deduction for interest paid in FY2015 (respective year) plus Rs 69,028. The cap on deduction in interest payment will stay at Rs 2 lacs.
What if the Residential Property is Let-out?
All the cases we have discussed above are for a self-occupied property.
Sometimes, you may not be able to use the purchased house for own use and may have to rent it out. The reasons could be many. For instance, you can stay in just one house. If you have more than one, you may to want to rent it out (or it will be deemed let out as per Income Tax laws).
What is the tax treatment in such cases?
The treatment of principal repaid remains the same (as in the case if the property was self-occupied).
However, in case of interest payment, the entire interest paid can be claimed as deduction. There is no cap of Rs 2 lacs in case of let-out (or rented) property. So, the entire interest income can be deducted from your rental income (or deemed rental income) to arrive at your Total Income from House Property.
During the initial years of your loan repayment, the absolute interest payout is on the higher side. It may so happen the taxable Income from House Property (after accounting for standard deductions and interest cost) is negative. In such a case, you can adjust this loss under other heads including salary. In case this is not possible (not enough income to set off against loss), you can carry forward this loss for another 8 years. For more on how to calculate income from House Property, please refer to Section 23 of the Income Tax Act.
From FY2018, the benefit for loss under Income from House Property has been capped at Rs 2 lacs per financial year. Any excess loss can be carried forward for the next 8 years. I have discussed this aspect in great detail in another post.
Read: How cap of Rs 2 lacs on Loss under Income from House Property affects your tax benefits?
Please note the requirement of completing the construction of house in 3 years 5 years applies only to self-occupied house. For a let-out property, there is no cap on tax- benefit for interest payment on home loan, even if the house is completed after 3 years 5 years. For the self-occupied property, the maximum tax benefit would have fallen to Rs 30,000 if the house was not completed within 3 years 5 years.
Additionally, for a let-out property, even interest on loan taken for repair, renewal or reconstruction can be claimed as deduction (subject to the cap for loss under income from house property).
Can I take both HRA benefits along with Housing loan benefits?
Yes, you can. This can happen if you are not staying in the house you have purchased. There may be a case where the city where you have purchased house is different from the city where you work. You put your house on rent and stay in a rented accommodation. Alternatively, you may have house in the same city but cannot live in it due to some reason (distance from workplace etc) and have to rent it out.
In such a case, you can claim HRA (House Rent Allowance) tax benefits since you are staying in a rented flat. Additionally, now that your own house has become a let-out property, you can claim deduction for the entire interest paid (and not just Rs 2 lacs).
You should have a case why you are not living in your house. Suppose you own a house but you are living in rented flat in the same building just to save on taxes. If your case comes up for scrutiny, the assessing officer may have an adverse opinion on the matter and can decline the tax benefits.
Can the tax benefits already availed be reversed?
Yes, this can happen if you sell the house within five years from the end of financial year in which you got the possession or the construction was completed.
For instance, if you got the possession in July 2012, you cannot sell the house on or before March 31, 2018. In you do so, aggregate amount of tax benefits availed (for principal repayment) will be added to the total income for the financial year (in this case FY2018) and taxed accordingly (as per your income tax slab). This is in addition to the capital gains tax liability that might arise due to sale of house.
Please note tax benefits for interest payment availed under Section 24 shall not be reversed.
Can I avail these tax benefits for two home loans?
Yes, you can avail benefits for multiple loans. However, total benefit for principal repayment is still limited to Rs 1.5 lacs. It does not change with the number of loans.
For interest payment under Section 24, the benefit for the self-occupied property will be capped at Rs 2 lacs. However, for the let out property (or properties), there is no such cap. The entire interest paid can be deducted from the income from House Property (Section 23).
You can choose any one property as self-occupied. Remaining will be automatically considered as let out house properties.
Can I borrow from a friend and avail tax benefits?
You cannot avail benefit for principal repayment under Section 80C if you have taken a loan from a friend or a family member. As per Section 80C, the loan must be availed from a bank, Housing Finance Companies, LIC, Central or State Governments. The exact list of eligible loans can be found in Section 80C of Income Tax Act. Loan from a friend or family member is not eligible.
However, you can avail benefits for interest payment under Section 24 even if you have taken loan from a friend. You must furnish a certificate from your friend specifying the interest amount paid during the financial year.
Read: Do not overestimate tax benefits on a home loan
PersonalFinancePlan Take
The tax benefits for home loans are linked to ownership of the house. Hence, for a property purchased through the builder, you must get possession of the house. For a house built on an own plot, the construction of the house must be completed before you start claim these tax benefits.
Moreover, to get the complete benefit of interest payment deduction under Section 24, the construction (or possession as the case may be) of the house (self-occupied property) must be complete within 3 three years 5 years from the end of financial year in which the loan was taken.
So, if you are planning to purchase an under-construction property, do keep these tax rules in mind. If the builder does not deliver on time, you will have to keeping paying rent and EMI at the same time for a long period. Not just that, your tax benefits will be compromised too.
A recap of tax benefits under various scenarios.
Image Credit: The original image and information about usage rights can be downloaded from Pixabay.
77 thoughts on “Tax Benefits on Home Loan Repayment”
I am having a home loan from Indiabulls Housing of 25lacs for 30 years starting August’14.
The Rate of Interest (floating) currently is 9.8. During this period, i have made a repayment of 1 lac rupees.
Also, due to rate cuts, the current tenure is 305 months.
Can I avail any benefit if I transfer my loan to SBI or HDFC and reducing it to 20 years.
Hi Vinu,
Technically, yes this is possible. Talk to SBI and HDFC to know about the exact procedure. Based on numbers given, your EMI should be approximately Rs 21,400. As per current rates on offer, your interest rate with SBI or HDFC may go down 20-25 basis points maximum. So, do consider the all-in costs i.e. processing fees, legal charges etc. before making the decision.
An additional point to note: If you reduce the tenor to 20 years, your EMI will go up. At 9.6%, 20 years, 24 lacs, your EMI will be approximately Rs 22,528. So, consider it from the affordability perspective too.
Thanks for your prompt response Deepesh. I will consider the points mentioned by you.
Hi Deepesh,
I am getting the possession of my second home in February 2016 and I am putting it on rent from March 2016. I got a home loan on this property in May 2014.
Can I get tax benefits in current FY? How should I calculate rental income? I mean rental income of March month only?
Hi Somnath,
You can get tax benefits for principal and interest payments during the entire year. Interest in the previous years can also be considered in installments over 5 years.
Rental income will be considered only for the month of Feb and March. For a let out property, it does not matter when you put it on rent. Even if you don’t, deemed rent will be considered your income.
You will allowed deduction for municipal taxes along with standard deduction of 30% and interest on housing loan.
You can refer to Section 22 and 23 of the Income Tax Act.
Thanks Deepesh for quick response. But for my condition which is a let out property only for 1 month, do I need to worry about the deemed rent for period prior to March-16?
If No, then I will be showing income and adjusted income (after doing SD and municipal taxes adjustments)?
My one month rent would be around 20K and I already paid 5L as interest on my 68L home loan this year
Thanks
Somnath
Somnath, income disclosure is mandatory, no matter how insignificant it is. It does not matter if you have any tax liability or not.
You have no discretion.
Btw, rent is deemed (or actually) earned after you take possession. So, you must include for Feb too.
Would suggest you take professional help. Talk to a CA or tax consultant and seek help for filing income tax return.
Thanks Deepesh.
I got it. Notional Rental Income should start from possession date irrespective of the date on which the property is put on rent.
Sure, I will take CAs help for filing my return
Regards
Somnath
Great!!! Glad you found the response helpful.
Hi Deepesh
I am currently in the 3rd year of repaying my home loan (20 year tenure).. The interest component is much higher than the principal component.
I am in 2 minds to either start repaying lumpsum 5lakh / 10 lakh every year against the loan to knock off the principal amount and reduce EMI or invest cash in FDs / shares and enjoy 30% relief of income tax considering I am in that income bracket.
What do you advise? How do I compare the 2 decisions financially considering time value of money, etc.
Thanks
Hi Vivek,
That’s the way EMI repayment structure is. In the initial years, the interest portion eats up most of the EMI. With every successive EMI, the interest portion keeps going down. Towards the later years, the EMI is mostly principal repayment.
It is a purely mathematical decision. You can do this in an excel sheet.
Calculate principal repayment and interest payment till the 20th year. Calculate tax benefit on interest and principal repayment. With this, you can calculate your effective cost of loan.
If you think you can generate better returns than the effective cost of home loan, then you can continue with the loan and invest excess funds somewhere else.
On the other hand, if you are not sure about generating better returns, then prepay the loan.
If you do not want to go through too much hassles, keep prepaying the loan. Bring it to a comfortable level. Once you reach that level, you can continue in the loan for tax benefits.
I have purchased two apartments on housing loan for my sons and staying in a flat. Can i claim interest benefit for both loans as rent-out property ?Please advise
Yes, you can do that. I assume you are not staying in any of the apartments you have purchased to gift to your sons.
I have taken a house loan in 2014 of Rs 15 Lacs at interest of 9%, in 2016 i have taken another loan for repayment of house loan at lower interest rate and repaid more amount of house loan in 2016 .So Can i get the deduction of house loan for the amount i have repaid for the loan.
Yes, you can get deduction for the amount of interest paid and principal repaid.
However, please understand there are certain pre-conditions. You must have got possession of the house.
There are different rules for self-occupied and let out property.
Suggest you seek assistance from a tax consultant.
Thanks sir for the Reply,
The house is Self Occupied Property only and i have got the possession of the house also.
You can have just one self-occupied property.The other will be let out or deemed let out.
If you have not rented out the second property, you will have to pay tax on deemed rent. Ofcourse, you will get benefit for principal and interest. So, it can get a bit confusing.
Seek professional help from tax consultant.
Okay thanks for the Suggestion.
Can you please tell me the pre-condition of the repayment
Please go through the post. The post has all the details.
Thank you for this info Deepesh, I have a quick question.
My Father is a 63 year old retired NRI who does not own any property in India. If he purchases a commercial space for 1 cr. can he then avail a housing loan of 25 lakhs on the rental income to purchase an apartment?
Also if the rental income before taxes is ~60,000 per month, (7,20,000 per annum) how much of it can he claim to pay his housing loan?
Thanks in advance.
You are welcome, Nayeem.
You need to talk to a bank about this. I don’t know if bank will be comfortable offering loan solely on the basis on rental income.
It may ask for commercial property as security. Will depend on a number of things.
Didn’t get your second question. He can use entire post tax income to repay housing loan.
Hi Deepesh, I have a query for which I cannot find an answer… It wud be great if u can help. This is regarding Sec 24(b). I bought a residential property in 2009 to be delivered in 2012. Took a construction linked loan in 2010. Unfortunately the construction stages are very slow and so also are the linked loan amounts that I am taking from the bank based on these delayed demands from builder. Hopefully in 2016 the builder will raise the final demand and I will take the complete loan as sanctioned by the bank in 2010 and full EMI’s will start. Now my question is, Sec 24(b) says 3 years from the date of loan. Now should this date of loan be start date of 1st installment in 2010 or date of last installment taken from bank in 2016. I understand that this 3 yr condition does not matter for let-out property, but what will happen in case it will be self-occupied property. Thank you.
Hi Vishal,
To be honest, I am myself confused on this matter.
I have talked to many people on this matter. Everybody has a different opinion.
In my opinion, it should be date of first disbursement. Otherwise, Section 24 (3 years criteria) is unlikely to be a problem for construction linked home loans where last tranche is disbursement just before possession.
Btw, in the last budget, the time was increased from 3 years to 5 years.
Thank you Admin…
I think when this Section was formulated, Construction Liked Loans might not have existed, only the one-time full amount disbursal… And for those it made sense to have a rule to construct property in 3 years from that full disbursal to prevent its use for other purposes. For construction linked loans it is confusing, although it makes sense to again have this rule kick in after complete loan is disbursed, otherwise assume a scenario where only 5% of a loan is disbursed and then the builder sleeps for 7+ years (like today’s scenario in Delhi NCR), and then completes it after 7 years. Then should the 3/5 year clause kick in from 5% disbursal or from the complete loan disbursal. Again this is confusing, and my personal opinion is that Sec 24 was not meant to handle Construction Linked Loans, or look at each Loan Installment Date and calculate if within 5 years or outside…
One thing, if you can with your experience throw some light on, is that the Home Loan Companies themselves do not assume that the loan is disbursed, and as an option only charge interest pre-emi’s till full disbursement takes place. I think they also assume that only when you take complete disbursal will the full emi’s kick in, and till then you have a choice of paying only pre-emi interest.
Similarly, is there some clarity regarding the above scenario for Let-out property vs self-occupied, or is that also not clear in the rules???
Thanks a lot for taking interest and responding…
Regards,
Vishal
This mess is only for self-occupied properties. No such thing for let out properties.
You have a point. Sec 24 would not have been drafted keeping in mind construction linked loans.
However, in my opinion, 3 years from first disbursement makes more sense. What else could drafters of the Act be thinking?
Pre-EMI or Full EMI has nothing to do with tax laws. So, no point venturing into this tangent. HFC get interest on the loan amount. Goof enough for them.
I am sure there are many cases like yours. This matter would come up sooner or later in a court of law. Better clarity would emerge at the time.
Btw, you can always argue your case against the assessing officer. Would suggest you seek services of a good CA. He can also help you if your case comes up for scrutiny.
Hi Deepesh,
Thank you for your quick & frank response. I really appreciate your help…
Regards,
Vishal
what happened if i
pay more than 1.5 lacs principal amount of my housing loan any problem in my income tax file
say example if i having loan of rs 2.5 lacs (right now) can i repay whole loan at a single time or maximum of rs 1.5 lacs. and what happened if i pay whole 2.5 lacs loan in single time
You can repay any amount. Just that tax benefits are limited to Rs 1.5 lacs under Section 80C.
SBI is not giving home loan on Corpus fund, sales tax and other extra items. Which other bank should i choose for a home loan of around 80 lac ?
Dear Divya,
Sorry, won’t be able to guide you in this matter.
I am going to get possession of a property in DEC-2019 which I am booking next month.
I have 15 lacks now cash.
Could you please advise me a best plan for repayment.
The agreement will be done by Nov-dec2016. and I will take around 30-35 lakh loan max.
I can pay max emi of 30K.
How can I get tax benefit? and how much tax can be saved as I am aware that interest paid and principle paid cannot be claim until possession ..not sure if I am correct?
Thanks in advance.
Chetan
Dear Chetan,
I am not sure if I got your question correctly.
Repayment schedule will be shared by the bank. EMI will depend upon loan amount, interest and tenor.
Sir,
My wife is working in an MNC in gurgaon.
We have jointly purchased a property in Supertech golf country in greater noida.
For this, my wife has taken a loan of around 25 lacs. for 10 years from India bulls.
Our’s is a residential plot of 100 square yards in supertech golf country.
After around 2 & a half years we have been given possession letter by supertech although the registry is still pending.
we took a loan of Rs 25 lacs in April 2014 and paying the EMI since then.
So we would like to know the following:
1). How could we take income tax benefit on this property as it is not constructed. Also, is it mandatory to construct the plot to avail the tax benefit..? If yes, how much construction is required and what about the permissions, approval & document required from the authority for this purpose.
2) We are already taking Hra from the company. can we simultaneously apply for the tax benefit on home loan too.?
3) Could we also show our property as a rented one and take tax benefit ..?
Kindly help.
You have purchased a plot or a house?
A flat from a builder
I will get possession of the flat, i booked in 2010, in December 2016. I have been paying EMI since 2012. I do not have any other house. Do I need to put the house on rent before the end of this financial year to get benefit of deduction, on account of interest paid on loan, from my income in 2016-17? Will it not be treated as deemed let out property and interest paid on home loan tax deductible?
I am not sure if I got your question right.
You will get deduction for the interest paid even if you do not the put the house on rent.
However, if you put it out on rent, you will get tax benefit for the entire interest paid.
Your property CAN be considered deemed let out is when you do not rent out your property (and also do not stay in it). If it is your first house, you can avoid it being a deemed let out property.
Pl. confirm if construction period condition of 5 years limiting to Rs. 30,000/- of intrest is applicable in case of let out residential property ( Not SOP) .Relevant link /extracts of IT section may be mentioned for showing in my office please,
In other words am I eligible for intrest component Rs. 30,000/- rebate or no limit for intrest component rebate in let out residential property . I got possession in Dec 2016 and housing loan was sanctioned in March 2011. Pl. guide
Dinesh Singh
Yes, not applicable in case of let out property. Hence, smart escape.
You can refer to Section 24 of the Income Tax Act.It refers to Section 23(2).
You are advised to consult a Chartered Accountant for more on this topic.
Hi Deepesh, i am a salaried person(30% slab)age dunder 40 and own one house for which my first home loan aviled has been closed now. Now i am confused on below two options viz. option 1: To buy second home and avail home loan, give existing house on rent, how this will drive my tax Option 2: First sell the exisitng house and buy new bigger house on home loan and live in that,
So which option should be better in terms of least tax liability?
Dear Nitin,
I am not sure if I got your question right.
What exactly is that you want to do? You want to purchase a new bigger house?
Hi i currently live in a house which i own and which can give me rental income of 12000 per month. Now if i go for second home against a home loan so whether it’s a wise decision as i come under 30% tax slab?
Or it will be wise to sell the exisitng home and use the entire money gained and go for bigger home agaisnt a home loan and which can give me tax benefits also?
Hi Nitin,
You will need to do it a bit of number crunching for this.
Do you want a bigger house? or planning to just for tax benefit?
You planning to buy under-construction property or completed one?
hello- thank you for the article, very helpful!
I have taken a home loan for 58 Lakhs this April. Am i still eligible to get tax benefits, because i have heard there is a cap for 35 lahks only to avail benefits. Kindly help.
You can take home loan tax benefits.
Rs 35 lacs limit is an additional tax benefit.
Hi Deepesh,
In case of delay of more than 3 years for getting possession of flat, relief of interest will be restricted to Rs.30,000 per financial year and 2 lacs for the year in which possession is received or actual for rented out house.
My query, HL availed in 2010-11 and possession for in 2016-17. For FY 2010-11 to 2015-16, limit of 30000 will apply which comes to Rs.180,000 for 6 years plus actual interest for 2016-17. Can the entire HL interest of Rs.180,000 for previous 6 years be claimed in one go in 2016-17 or it needs to be split into five instalments.
Will full relief be given by employer while deducting tax?
anil53.khanna@gmail.com
Dear Anil,
This period of 3 years has been increased to 5 years.
Rs 30,000 is what you get as tax exemption under Section 24 of the Income Tax Act.
Pre-construction interest can be divided by 5 and you can avail tax benefit in 5 equal installments over the next five financial years.
Hi Deepesh,
For current FY investment purpose if i plan to travel in January, 2017 can i submit the tickets post travel (say in feb, 2017)which will be considered against my monthly LTA reimbursement salary component for tax rebate?
Secondly, ideally the travel bill submitted should be equal to the yearly LTA Total reimbursement i am getting for maximum benefit?
Hi Nitin,
I am not sure if I got your question correctly.
You will submit documents only post travel. You need to check submission deadline with your accounts team.
There is no ideal travel bill. You submit what you have incurred. The benefit will be capped at LTA.
Hi Deepesh,
Found this site on google and liked it very much. I have a couple of queries regarding my home loan.
1: I have made a part payment of 50K last month apart from the pre-emi I pay each month. The part payment has reduced the tenure of home loan, my house is still under construction and expected to get possession by end of 2017. Can I claim tax benefit on the 50k paid to bank.
2: I found to complete all of the requirements of sec 80EE but not sure whether this applies to under construction properties, can I claim tax under sec 80EE.
Hi Bhuwan,
1. Tax benefits on home loans are applicable only after you get possession of the house. There is no tax benefit for principal repayment before the year of possession. Hence, no tax benefit in my opinion.
2. Section 80EE is for first time borrowers. There are a few conditions to be met such as purchase value should be less than Rs 50 lacs and loan amount should be less than Rs 35 lacs.
Hi Deepesh,
Does sec 80EE applies to under construction properties?
Dear Bhuwan,
I checked the section 80EE again. There is nothing mentioned in the section that prohibits you from taking benefit for under-construction properties. That is not the case with SEction 80C and Section 24.
As I understand, you can avail it even for under-construction properties.
However, there are pre-conditions to be met i.e. first house, loan < 35 lacs, house value < 50 lacs etc.
Please contact a Chartered Accountant for better clarity.
I have 2 homeloans in a metro. Because of personal reasons I am staying in rented house. Shall I claim Interest and principal on both the loans and HRA
Mostly yes.
Thank you very much Deepest Raghaw
Hi Deepesh,
I am having a homeloan whose principle outstanding is 8 lakh as on date and ROI is 9.25 % . I want to repay outstanding and at the same time want to take benefit of tax exemption in financial year 17-18.
Would be a good decision to repay approx 6 lakh now and repay balance amount in april to get benefit of tax exemption on principal under 80 C. Please advice. I am in 20 % tax bracket.
Hi Ashish,
I am not sure if I got your question right.
Principal prepayment also qualifies for tax benefit under Section 80C. You can spread over two financial years if you wish.
I have property which is given on rent, i know the intrest part is fully deduction under section 24, can i claim the deduction for the society bills which im paying on monthly basis ?
In my opinion, no.
Please consult a Chartered Accountant.
Whether interest on LAP taken on existing owned property to pay brother for his share in father owned house be claimed under section 24.
1. in case the property is still in father’s name
2. the property is gifted to me in place of payment made by me to him for his share in the property.
Section 24 is only for housing loans. Loan against property is not covered.
recently i bought a flat , i made a down payment of 30L ( self funded) and loan of 15 L …. can i avail any benefit on those 30L ( down payment part )
There is no benefit for your own funding.
I repaid my first home loan & bought second house on loan. Both properties are self occupied as both are adjacent. What are the tax benefits ?
This can be a matter of debate.
In my opinion,it should be same as for any self-occupied property.
Please consult a Chartered Accountant.
Hi Deepesh,
I have got the possession of my flat just now. I am planning to put it on rent by March’17 as one month will be required to furnish it. My question is can i show it as let out property even if i am not able to get any tenant till March ’17 and it is vacant for two months (Feb and March)?. I have to give declaration to my office for tax benefits, so in dilemma shall i claim the entire interest paid for this FY as per let out rule or shall i restrict it to 30K/2Lac as per self occupied property?
Any suggestions on it would be very helpful. Thanks
Deepak
Hi Deepak,
It is not always a question of choice. There are quite a few ifs and buts.
Suggest you consult a Chartered accountant. He/she will guide you better.
In any case, if you let out for a month, it will be considered a let out property.
Hi Deepesh,
I am planning to buy a plot which has an already constructed house ( residential plot with house ) for which I would be taking a loan from any of the banks. Would I be eligible for any tax benefits/deductions for such an investment. Thanks to reply.
Hi Vineet,
Tax benefits are not available for purchasing a plot. However, as I see, you will purchase the house.You should get tax benefits for the same.
Hi Deepesh,
I took a loan with SBI in August 2017 for an under-construction property which is scheduled to be delivered by Dec 2018.
In the meanwhile, I have been paying off whatever monthly interest is showing up in loan account to avoid ‘interest on interest’. Till now 4 out of 8 disbursements are made.
As per my understading from your blog, I can claim this interests I’m paying till possession in 5 equal installments from FY 2018-19 till 2023-2024, correct? Will this be within the 2 lakh limit of each year or is it beyond that? Since there will be further interest I will be paying after possession also, is the limit combined for both these interests?
Hi Krishna,
You can claim benefit for pre-construction interest for 5 years.
It comes within the limit of Rs 2 lakhs.
Hi Deepesh,
Reading your blogs was truly enriching. I was pondering on one the most commonly asked question as per below:
Home Loan Tenure if I keep it for 20 Yrs, say for Moderate amount of Rs 30 Lacs, Initially my repayment would go to Interest and then to Principal. So to take the Benefit if I Keep initial EMI of more amount limited to exhaustive limit of sec 24 interest and then towards successive 8-10 Yrs amount I drop off my EMI Amount, would it create benefit.
Thanks Manoj.
I am not sure if I got your question right.
Suggest you go through the following post.
https://www.personalfinanceplan.in/financial-planning/calculate-loan-emi-calculator/
Let me know if you have any further questions.
Hi – I had a home load but I completed it by paying a lum sum amount of 20 lacks. What are the tax benefit that I can avail for this financial year ?
upto 1.5 lacs under Section 80C