Income Tax Benefits on Home Loan in India – 2014-2015 Budget

By October 24, 2014 175 Comments

How do I get income tax benefits on home loan? What if I have purchased a second house- Am I still eligible for tax benefits? What are the income tax benefits on home loan if I wish to go for Joint/construction linked loan?

Housing Loan Tax Benefits -Budget 2014-2015

  • Increase in deduction limit on interest on home loan for self-occupied property from Rs 1.5 lakh to Rs 2 lakh
  • Increase in deduction limit on Principal on home loan from Rs 1 lakh to Rs 1.5 lakh(under Section 80C)

Most of us are now looking at investments in real estates, as a better option. If you speak to anyone, who has invested in a real estate property in the past 10 years, they will explain how the value of their flat is doubled or even tripled in couple of years!

Yes, real estate as an asset class is gaining momentum among investors. Whatever said and done, you require a house of your own. You can have a second property as investment, if your budget permits the EMI for a home loan.

Another major benefit of investment in property is the huge income tax benefits on home loan.

Let us see how it works for you?

income tax benefits on home loan Income Tax Benefits on Home Loan in India   2014 2015 Budget

If you are going for a flat worth 50 lakhs, you will be eligible for 80% of the cost as a home loan, provided you have the income to support the EMI and your credit score is good. Let us see the factors in the home loan.

In this case, you may get 80% of 50 Lakhs i.e. 40 Lakhs as loan. If you are opting for a 20 year term, the Equated Monthly Installment (EMI) will be 39,935 assuming the interest rate of 10.5%.

How the EMI works?

In the EMI of 39,935 there are 2 components, Principal and interest. In the initial years, the principal component will be negligible because the interest component will be very high. After repaying the 12 EMIs, the outstanding loan will be 39, 37,843, because only 62,157 will be repaid as principal while 4, 17,063 go towards interest! Slowly, the interest component will come down and principal will increase. At the later stage of the loan, the interest component will be less.

Income Tax Benefits on Home Loan

Income tax benefits on home loan can be divided in 2 components

  • Principal component in EMI
  • Interest component in EMI

The principal and interest component EMI will get different tax benefits.

Income Tax Benefits on Home Loan – Principal Component

You are eligible to claim tax benefits under Section 80C for the principal repayment of a home loan. You can claim deduction up to 1.5 Lakh along with all other permissible instruments like, life insurance premium, PPF, ELSS, NSC etc.

You are eligible for this benefit only if the loan is for a self occupied house. But if you are staying in another city for job and have house in another city, then you can claim this benefit even if the house is not self occupied.

Income Tax Benefits on Home Loan – Interest Component

Under Section 24 of the IT Act, you can claim deduction up to 2 Lakhs in a year for the home loan interest paid. The limit of 2 Lakhs is applicable only for the self occupied house. If you are going for a second house, you can claim the actual interest paid as deduction. The limit of 2 Lakhs is not applicable here.

Construction Linked Loan

If the loan is construction linked and if you are paying only Pre EMI interest, there is a change in the way you get tax benefits.

Pre EMI interest is not eligible for tax benefit, at the time of payment. But you can claim this in 5 equal installments after the construction of the house. The total interest paid at this stage can be claimed in 5 equal installments starting from the year in which you get possession. But please note that the limit is fixed as 2 Lakhs in a year in this case also.

If you pay EMI before occupation of the house

In this case, you will not get any benefit under Section 80C for the principal repaid before occupation of the house. You can claim the benefits under Section 80C only from the occupation.

For the interest paid before occupation, you will not get the tax benefits immediately. But the total interest paid before occupation can be claimed in 5 equal installments from the year in which you get the occupation. But the limit per year is 2 Lakhs.

Income Tax Benefits on Joint Home Loan

Though the tax benefit is limited to 1.5 Lakh under section 80C and 2 Lakhs in Section 24, you can get more benefits, if you go for a joint home loan along with your spouse. If you go for a joint home loan with your spouse in the ratio of 50: 50, then both of you can claim these benefits separately. So the limit will be 3 lakhs in Section 80C and 4 Lakhs in Section 24. This can reduce your cost of loan considerably.

So, enjoy the income tax benefits on home loan and congratulations for having your dream home.

Please feel free to ask if you have any queries regarding income tax benefits on home loan.

 

 

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175 Comments

  1. DP Pillai says:

    i had closed my first housing loan. now i am planning for the second housing loan. Will i get tax benefit for the entire interest paid for the new loan ? do i need to have both loans active at the same time to avail tax benefit for the interest paid for second home ?

  2. Manish says:

    Dear Sir,

    I am claiming tax benefit on a home loan which was taken 10 yrs back which is not self occupied by me as I am living in another city . Now I want to buy another home in the same city (where first home is ) and want to get tax benefit on this (second home also) also.

    Pl guide me to get best tax benefits from both the home loan…

    • Ritz P says:

      Hi Manish

      You will get only the normal benefit of 1.5 lakhs for your new loan.The additional 1 lakh benefit is only for first time home buyers.

  3. Wilson says:

    Dear Sir/Madam,
    I have a home-loan for a home purchased in City1 where my parents are living. This home loan in my name as borrower and my brother is co-applicant/guarantor. (Both of us claiming tax benefit @ 50:50)
    I am now planning to take the home-loan in CityB where I am working.
    Please let me know the total home-loan benefit (city1+cityB)

    • Ritz P says:

      Hi Wilson

      Since you are already having a loan, in the new loan, you will get only the usual deduction of 1.5 Lakhs. The new scheme of 1 Lakh is only for first time home buyers.

  4. Karan Batra says:

    If a home loan is taken for an under-construction house and the property is sold before the completion of the house, the taxpayer cannot take deduction u/s 24

    But at the time of sale, can he claim the Interest Paid as an expense ?

  5. THAVAMANI CHARLES says:

    DEAR SIR,
    I HAVE APPLIED FOR A LOAN TO PURCHASE A FLAT WHICH COSTS 52 LAKHS.THE LOAN AMOUNT IS 44 LAKHS AND IT IS A JOINT LOAN BETWEEN ME AND MY DAD IN THE RATIO 50:50.AND FOR ME IT IS THE FIRST HOUSE FOR MY DAD ITS SECOND .THE LOAN IS NOT SANCTIONED YET.WILL I HAVE ANY EXTRA TAX BENEFITS ACCORDING TO NEW BUDGET IF I TAKE A LOAN NEXT MONTH??:(APRIL 1 st 2013 ONWARDS) KINDLY REPLY SIR

    • Ritz P says:

      No. This is for loan upto 25 Lakhs and the property cost must be within 40 Lakhs. Regarding joint loan and it’s applicability, you may consult a local CA with all documents.

      • Andy says:

        40 lakhs = base price of property? or it includes stamp duty, maintenance etc? I’ve bought a flat with consideration value less than 40 lacs but all together it’s 45.5. will I be elgible for extra tax benefit?

  6. Pushpanjali says:

    Hi,

    We have a joint home loan( I and my husband). This is still active. Its self occupied property. We are claiming 50:50. ( 1 lakh each on principle and 1.5 lakh each towards interest.
    If we buy another property now in joint names, whether we be eligible for claiming 1.5 lakh each towards the interest along with the benefits avialed on previous property ?

    I mean totally, 1 lakh(first property principle) + 1.5 lakhs(first property interest) + 1.5 lakhs (second property interest ) for each one us.
    That means = 4lakhs (towards my tax calculation) + 4lakhs(towards my husband’s tax calculation) totally.

    Is my understanding correct ?

    Please let me know.

    • Ritz P says:

      The announcement of 1 lakh deduction will not be applicable to you.
      However, if you apply for a second loan, you can claim the actual interest as deduction. This can be shared between both of you, in the proportion of your ownership. so, the actual interest deduction can be more than 1.5 Lakhs.
      But the deduction under Sec 80C will not be available for second loan. Anyway, it is capped at 1 lakh.

  7. sumit says:

    Hi,
    There is an additional benefit on interest paid as announced in budget 2013(for interest upto 2.5 lakhs).
    But the loan has to be taken in financial year 2013. What does it mean?
    should the loan be sanctioned in 2013 or disbursed or what?

  8. Rohit P says:

    Hi Sir, I Have applied for a Home loan in LICHFL, where they have suggested to take Bhagyalaxmi scheme, where they will keep my wife as applicant & me as co-applicant. She is a Housewife and I will repay the loan. So am i eligible for full tax benefit ?

    • Ritz P says:

      Yes, if you are repaying the full EMI from your income, you can claim the tax benefits.

    • Ravi says:

      Dear Sir,
      I have taken home loan with my wife as an applicant & I being a co-applicant. Property is on our name(me & my wife), loan is on our name but EMI will be deducted from my salary. So How will my wife avail tax benefit. Pls guide.

      Thanks
      Ravi

      • Ritz P says:

        Since your wife is also a co owner on the property and she is a co applicant in the loan, she is eligible for income tax deduction. ask her to pay you her share of the EMI through cheque or online transfer. Then she can claim the tax benefits. Or opt for a joint account and pay EMI from there.

  9. simha says:

    I have taken first composite loan( loan for site cum construction) in the year 2012. I am paying the Pre-EMI so far. Actually I have started constructing my house just 2 months back and will get complete in the month of June 2013. And from there on my actual EMI begins. In this scenario, can I avail the extra benifit of 1 lac as per the new taxation guidelines. Please suggest.

  10. R Sreedhar rao says:

    Dear Sir/Madam,

    I am claiming tax benefit on a home loan which was taken 02 yrs back which is self occupied by me, as I am Paying EMI 12000/-Per month . and want to get tax benefit on this, and i dont know about principal amount and interst amount, Plz let me know PA saving amount.

    Plz guide me to get tax benefits Per anam from the home loan

    • Ritz P says:

      You will get a letter from your bank giving details of principal and interest paid. You can give the details to your employer and get tax benefits.

  11. Akash says:

    I want loan upto 25 lac and this is my 1st house.
    1) Just need to confirm if loan approved before April 1, 2013 and disburse after April 1 2013 then i get this benefit or not
    2) or the loan should be approved after April 1, 2013 are eligible for TaX benefit.

    • Ritz P says:

      1. The notification says first home buyers and loan sanctioned from 1st April 2013 to 31st March. 2014. However you may consult a local CA with the details to reconfirm it.

      • Kishor says:

        Hello Ritz,
        I have same question?
        My loan is sactioned on 10 March 2013. I will be taking disbursement on 1st April. Will I will be able to take this benefits

        • Ritz P says:

          No, as per the suggestions, it is applicable for loan sanctioned after 1st April. However you may cross check with your bank later. This is because the budget proposals can be modified after debate in parliament.

  12. dilip says:

    Dear sir.
    Ihad taken a homeloan (first time) for a.secondhand house. Am i eligible for the additional 1 lakh.??

    • Ritz P says:

      As per the available information, this is only for the first home buyers. So, you will not get it because you are already having a house.

  13. vikas walia says:

    I have two questions :-

    1) I have my first home purchased at City A, I will be staying at City B now & I will put first home at rent. Will I get the tax benefit under 80 C for Principal & Under 24 for Interest paid ??
    2) As per article 24 if suppose my taxable income is 5 Lakh so it will decrease by 1.5 Lakh ?? is that correct ??

    • Ritz P says:

      1.Yes, you will get tax benefits for the house in City A. But you have to add the rental income to your income and pay tax for it after the permissible deductions.
      2. No, your eligibility will be 1.5 Lakhs only. The additional 1 lakh is for first home buyers in 2013-14.

  14. Anjan Ghosal says:

    Dear Sir,
    1. if I go for a new home loan of 40Lakhs and if this is my first house, will I get TAX benefit of 2.5 Lakhs ?
    OR will it be only for loan taken not exceeding 25Lakhs ?

    2. If I go for a new home loan jointly with my wife for whom it is a second home loan, will i still get benefit of 2 + 3= 5Lakhs ?

    • Ritz P says:

      1. No, the additional benefit is limited to loan upto 25 Lakhs. Regarding joint home loan, clarity is awaited.

  15. Manish Kumar Thakur says:

    Dear Sir,

    I have taken a home loan ten years back n I m availing IT benefit on it but I never took benefit of loss on property.

    Pl suggest me the standard procedure n amount which can be adjusted in the name of loss.

    Pl send me the proper procedure of calculating amount for considering and how it should be reflacted in the declaration form.

    Thanx n Rgds,

    Manish

  16. Corebhai Mistri says:

    Dear Sir,

    I am in process to buy new house(flat) but I need clarity on following things;
    1. Can I avail this benefit on flat registered on my name before in duration of 01-Mar-2013 to 01-Apr-2013?
    2. I understand that this benefit is for loan disbursed on and after 01-Apr-2013, but is it necessary that loan application and loan sanction should be on or after 01-Apr-2013?
    3. Can I avail this benefit on property registered on my name before 01-Apr-2013 but loan applied & reimbursed on or after 01-Apr-2013?

    CONDITIONS:
    A. I don’t have any loan as of now on my name,
    B. value of property is under 40 Lakh and
    C. the loan I would be availing is of 25 Lakh or less.

    I am into this confusion because the builder want to sell this flat as there will be revised guidleline rates of property in my city from 01-Apr-2013. And he want to save a substantial amount in form of ‘Capital Gain’ to sell this property before 01-Apr-2013.

    Kindly advice, I have consulted couple of local CAs but no clarity till now.

    • Ritz P says:

      1. Yes, this is applicable for new loan applications from 1st April. 2013 and that too for first home buyers. If you have already registered the property in your name, you may not be treated as a first home buyer. But since the loan is for the same property, it can be. Only a local senior CA can guide you after seeing all the documents.

  17. Kiran says:

    I am planning to buy home worth of 45 lakh which includes Stamp duty, Service tax, VAT and other Amenties in Hyderabad. However, I am planning to go for 25 Lakh home loan.

    Will i come under this new scheme for tax exemption if the property goes beyond more than 35 or 40 lakh? or there is no restriction and only the amount which we are taking from bank as loan? Please advise

    • Ritz P says:

      As per the budget proposals, the value of the property should not be above 40 Lakhs and the loan should be limited to 25 Lakhs.

  18. Lakkshminarayanan says:

    Hi,
    I have purchased home in CityA (Home Town) and I stay in CityB. The home loans main applicant is myself, Co- applicants are dad and elder brother. Property is in name of all the three.
    Loan was sanctioned in mar 2013 and pre emi interest alone was charged for month of mar 2013. EMI repayment starts from April 2013. The house was occupied by parents in CityA from March.
    1. Can I claim tax benefit for pre-emi interest paid during mar 13?
    2. Am I eligible for tax benefit (Interest + Principal) in 100% or its applicable in ratio between myself, dad, brother?

    • Ritz P says:

      1.You can claim the pre EMI interest benefit in the next 5 years. If the interest paid is x, then you can claim x/5 for the next 5 years, but the maximum per year is capped at 1.5 Lakhs.
      2. It will be in the ratio of your ownership.

      • SSB says:

        “but the maximum per year is capped at 1.5 Lakhs….”
        I want to know if this cap include both pre-emi interest and normal emi interest OR there is separate 1.5lakh cap for pre-emi interest and normal emi interest. THANKS.

  19. Mani says:

    I have taken first home loan(25 lac) in the year August 2012. Loan sanctioned dated on August 2012. I am paying the Interest so far. Actually I have started constructing my house just 2 months back and will get complete in the month of June 2013. And from there on my actual EMI begins. In this scenario, can I avail the extra benefit of 1 lac as per the new taxation guidelines.

  20. Rt says:

    I have my housing loan approved on this month for a my first house and this is for constructing new house. But my first EMI starts in April 2013 only. Can I avail the extra 1 lakh interest benefit?

  21. Rohin says:

    I have bought a under construction apartment jointly with my sister. We have a home loan from SBI. Can we claim tax deductions considering we are brother-sister ?
    I do understand the tax benifit can only be claimed when the construction is completed and we get posessions. The question is about the brother-sister joint ownership.

    Thanks in advance

    • Ritz P says:

      Yes, both of you can claim the tax benefits as per the ratio of the ownership. Ensure that the EMIs are paid by both to ensure smooth process.

  22. vishal says:

    Hi, one of the finance institution is to go for split home home loan i.e 10 lac + 15 lac for the same home. to achieve lower interest rate. would it be beneficial overall for me..will i get tax benefit for both home loan…..home is one only….just bank is insisting me to take two home loan then we we will give a rate of 10.15 inplace of 10.25. pls suggest me at the earliest

  23. Abhinav Maurya says:

    hi,
    I am first time home buyer. I am taking property worth 27L. My home loan is sanctioned for 20L in month of March 2013. 5L will be disbursed in month of March & rest in April-13.
    Am i eligible for additional 1 Lakh of exemption as per the new budget.
    Also the pre Emi that i will pay in Month MAr-13, can i claim this in other FY.
    Please advise.

    • Ritz P says:

      No, the additional 1 lakh limit is only for loan sanctioned from 1st April. 2013. Pre EMI interest can be claimed in the next 5 years.

  24. Vikram says:

    For additional one lakh benefit , should the home loan applied after 1st April 2013 or the home sanction date should be after April 2013 ?

    That is, is it OK to have the loan applied in the month of March 2013 and sanctioned on after 1st April 2013 ?

  25. Gopal says:

    I have two separate loans with the same banker for the same home and my question is, do i get the tax exemption benefits for both the loans say prinicipal 1+1 = 2 lakhs and interest 1.5+1.5=3 lakhs. please confirm.

    Another question, if i plan to buy a new home in the name of my wife (no house registered on her name which is the first home) jointly and apply for new home loan do we get the additional benefit on interest component 1 lakh as per new budget 2013.

    • Ritz P says:

      No, your total eligibility will be 1 lakh for the principal repayment and 1.5 lakhs for the interest paid.

      If it is a joint home the additional benefit will not be available because you are already having a home in your name. It is only for first home buyers.

  26. Anil Kumar says:

    I want to know that can I get Tax rebate on additional construction of house?
    Earlier I availed loan of Rs 10.00 Lakhs and now I want to avail loan of Rs 4.00 lakhs for additional Construction of house.

  27. Tuhin says:

    Hi,
    I had purchased a flat in City A in 2008 with home loan. The loan has been pre paid and thus the property is now free. Currently I am in City B. My previous flat is on rent.
    I am planning to purchase another flat in City A in July this year. It is construction linked and would get possession in June 2014 i.e. in next FY.
    I am availing loan for this. I understand that in this FY, I won’t be able to claim for deduction for interest paid. What would be the limit for exemption on interest from next FY – 1.5L or the actual interest, since this is my second home? Also, can I club the interest paid in this FY in next?

    • Ritz P says:

      You can claim the actual interest paid in the case of second home.
      Interest paid before occupation can be claimed in 5 equal instalments in the 5 years after occupation.

  28. Sudheer says:

    Hi.. I want to know in more detail about Construction linked loan. As mentioned above, the max interest amount considered for IT benefit is only 7.5L.. Please correct me and provide any additional info..

  29. Praful says:

    Hi,

    On second housing loan can you take Interest tax benefits if the possession of house in not within this financial year i.e. by 31/03/14.

    1st home loan is also operational along with this 2nd loan

    • Ritz P says:

      Exemption on interest paid before occupation cannot be claimed now. You can claim this amount in 5 equal instalments in the first 5 years after possession.

  30. Rit says:

    I own a house in CityA jointly with my wife for which we are already claiming tax exemptions on home loan repayment. I have living in CityB on rent. Now I have just purchased a house in CityB again jointly with my wife on loan. But I plan to continue staying on rent in CityB since the house I bought in CityB is small for us and is far from my office and let this new house on rent. In this situation, I would like to understand the following:

    1) Can we claim tax benefits on BOTH loan payouts (1 lakh in 80C and 1.5 lakh in 24b for both me and wife)? i.e. Total 5 lakhs of deductions.

    2) I have two rental incomes now. One in CityA and another in CityB. Will they both be added in our total income in 50:50 ratio? and Will standard deductions be applicable on both these rental incomes separately?

    Rit

    • Rit says:

      Also, with regard to above question, since I am living on rent in CityB, will I still be eligible for HRA exemptions?

  31. Rit says:

    I own a house in CityA jointly with my wife for which we are already claiming tax exemptions on home loan repayment. I have been living in CityB on rent. Now I have just purchased a house in CityB again jointly with my wife on loan. But I plan to continue staying on rent in CityB since the house I bought in CityB is small for us and is far from my office and let this new house on rent. In this situation, I would like to understand the following:

    1) Can we claim tax benefits on BOTH loan payouts (1 lakh in 80C and 1.5 lakh in 24b for both me and wife)? i.e. Total 5 lakhs of deductions.

    2) I have two rental incomes now. One in CityA and another in CityB. Will they both be added in our total income in 50:50 ratio? and Will standard deductions be applicable on both these rental incomes separately?

    3) Also, with regard to above question, since we (I and spouse) am living on rent in CityB, will we still be eligible for HRA exemptions?

    • Ritz P says:

      1.If you are staying on rent because of proximity to your office, you can claim tax exemption on both the houses. Out of the 2 houses, one will be assumed as for self occupation and there the interest paid of 1.5 Lakhs will be exempted. On the second house you can claim the actual interest without any limit.
      2. Yes, rental income will be added in the ratio of ownership and is liable for tax. Yes, standard deduction will be available on both.
      3. Yes, you can claim HRA exemption also

      • RIT says:

        Thank you, sir. I am clear with your answer no. 2 and 3. But regarding answer no. 1 above, I request clarification. I am living in CityB, but not in my house – I am on rent since rented house is close to office and is of the size that we require. And my actual house in CityB has been given on rent. Therefore, I can’t this property as “self-occupied”. It should also be treated as “let out” property same as in the case of my house in CityA. This is what seems logical. Please check my description again and reply. It will help. Thanks a lot.

  32. Rahul Arora says:

    Hello Sir,

    I bought a 2bhk flat in B’lore which will cost me around 26.5L ( incl registration ) and possession will be in Mar 2014
    This is my first home and under construction.
    I took home loan from HDFC for 20L
    Loan was approved on 3rd April and I have paid 1st pre-emi as well.

    I want to know if I can apply for home loan deduction for this year’s IT
    if yes, then in under which section I can get tax benefit.

    Thanks.

    • Ritz P says:

      You can claim the interest paid during the pre EMI stage in 5 equal instalments starting from the first year after possession.

  33. Ram Mehar says:

    Sir,
    I have taken a construction based joint home loan in march 2013 for my first home with my wife. I want to know whether i with my wife can claim for income tax rebate for processing fee u/s 80c or not for the year 2012-13 as the EMI will start from April 2013.
    Kindly guide me.

  34. Anish says:

    My wife and I are planning to buy a property in range of 50L and we will be taking a joint home loan, can you please elaborate on the tax benefits that we can avail. Can we avail the tax benefit of additional 1L for loan <25L as it is going to be a 50:50 ownership and loan liability which will be less than 25L for both of us.

    Thanks

  35. RAJU says:

    I am going to purchase a flat in joint name with my father 1st name of mine ( first time buyers of Home) and 2nd name with my father (already he has house in their name) can i get benefit of 1 lac extra interest ( 1.5 lacs + 1.00 lacs) during FY-2013-14.

    Thanx..

    • Ritz P says:

      You will get it, provided there is no home in your name earlier. However you may reconfirm it from a local CA after showing all the documents to him.

  36. Anant Garg says:

    Hi,
    I have purchased, my first home in City A, under construction link plan & will get possesion by 2015. For it I will be taking loan of 40 lakhs.

    1) Can I avail the deduction of 1.5 lakhs now.
    2) If I take joint loan along with my mother, can both of us claim deduction of 1.5 lakhs each for interest. so total deduction of 3 lakhs. And 1 lakh each for 80C.
    3) I am working in City B, & living in rented home. Can I avail HRA exemption also, along with Home loan deduction.

    • Ritz P says:

      1. Interest exemption can be claimed only after occupation.
      2. Yes, if the flat is in joint name then both of you can claim the exemption.
      3. Yes, you can claim the HRA exemption also.

  37. Venkatesh V says:

    Hello,

    I have applied for construction linked loan. My loan of 32 lacs got sanctioned in April 2013…and my first disbursement is scheduled for May 1st week. The possession is scheduled in July 2013. Assuming pre-emi to start from May itself..after possession in say july 2013, how can i avail the tac benefit of pre-emi…will it be eligible this year itself or from next FY.

    Regards
    venkatesh

  38. HUSSAIN says:

    Dear sir,
    1- if house under construction, Can I take tax benefit Under house on interest 150,000/- ?
    2- is it possible for house interest tax benefit each year (till 5years), after house construction complete or not ?

    • Ritz P says:

      The interest exemption is allowed only after the completion of the house. But the interest paid earlier can be claimed in the first 5 years after completion.

  39. Ajay says:

    I already have a house but has not taken a home loan for it. I am planning to buy a second property on loan but will not be self occupied. My loan amount is 25L. Since I am not going to self occupy will my tax benefit on interest be on actual or to the maximum of 1.5L or will it be 2.5L.

  40. Prakash says:

    Hi,

    I have a flat (self occupied) bought 5.5 years ago for which I am still getting the incometax benefits for its loan. Now, I am planning to sell out this flat and buy another one in the same city. Can I claim both principal and interest on this new flat loan or will it be considered 2nd home?

    • Ritz P says:

      Yes, you can claim benefits for both principal and interest.

      • Prakash says:

        Thanks alot RitzP, you have been providing very useful information in this blog. Do I still have to pay the Long term capital gain tax on apperciation amount I get from selling my first flat even if I am investing that amount in purchase of another?

        • Ritz P says:

          No, if you invest the long term capital gain to buy another flat, you need not pay Long term capital gain tax.

  41. Nitin M says:

    Hi, my situation is slightly complicated. I bought a house in 2006 and took a loan of 9 lakhs from SBI and started paying EMIs immediately. The possession was to be in 2009 but kept getting delayed. In 2010 I bought a second house with a govt loan of 25 lakhs. I got possession of this house in 2012, before my first house. I have now got possession of my first house. Does this count as my second house due to late possession? Does the fact that I took the loan for it earlier make any difference? If it is considered my second house, do I get any rebate on the interest paid for the last 6 years? Is there any way to make it my first house as the value of my second house is much more. I hope I havent confused you too much. Thanks, Regards, Nitin.

    • Ritz P says:

      You have to consult a local Chartered Accountant with all the documents, payment details etc. to get a clarity on this.

  42. Sashi says:

    Sir,Im buying a house along with my brother as Joint purchase.Flat value is 35 lakhs and the loan which got sanctioned is 26.5 lakhs so is this new rules applicable for me?
    I have this doubt because loan amt was 26.5 Lakhs but since its joint account i dont think my individual thing alone would be 25 lakhs.Please clarify my doubt.
    Thanks!

  43. ASHU says:

    I want to buy a house for rs. 65 Lacs in joint name of me & my wife with a loan amount of rs.48 Lacs with aownership ratio of 50%/50%.We are buying house first time. What income tax rebates we both will get .This house willbe self occupied by us.

    • Ritz P says:

      Both of you can claim 1 lakhs in Section 80C for the principal repayment. Another 1.5 Lakhs each can be claimed under section 24 for the interest paid.

  44. Viju says:

    I have a home loan running for the past 4 years. I plan to take another home loan next month without closing the first one.
    Can I show the int. rate of both the loans to get the tax excemption or is it required to close the first loan to get the benefits of the 2nd loan.

  45. Srikanth says:

    Hi,

    I took a house construction loan from SBI in month of April 2013. My pre-EMI will be started from June 2013. The project is likely to complete by January 2014.
    But until now I am staying in a rented house. I will be paying full EMI from Feb 2014 onwards which comes within the current financial year. I shall also get house completion certificate from bank by then. As I am currently staying in rented house, and also going to get the possession of the house within the same current financial year, can I get the tax benefit for both house loan and rent?
    Please advise

    • Ritz P says:

      Yes, you will get HRA benefits till you stay on rent and after possession, you will get the benefits of housing loan. The interest paid before possession can be claimed for exemption in 5 equal annual instalments after possession.

  46. jasvir singh says:

    i have taken 5lac. rupees as house loan from SBOP My installment is Rs.5,000 per month (Rs 60,000 per/year) and interst of bank is Rs 47,000 (approx.) per year
    pls tell me rebate on my salary as saveings = ?
    direct deductions from salary = ?

  47. Vivek says:

    Hi,

    My father and I have taken a joint home loan for a completed property. This is my first house purchase and my fathers second. My parents are going to occupy this house and my father’s first house will be put on rent. I live in a different city. Please let us know the maximum that we (my father and me separately) will be able to avail under HRA, 80c and 24. And if there are any other implications.

    Thanks,

    Vivek

    • Ritz P says:

      If you live in another city, you can claim HRA exemption. For your first home loan, you can claim 1 lakh in Section 80C and 1.5 Lakhs under Sec. 24. for your father, it is a second home, so he can claim actual interest paid as deduction.

  48. chetan says:

    I was living in myself occupied which is purchased under home loan and still active.
    This year I have purchased a second house which is also under home load and shifted there.
    The first house is now let for rent.

    The annual interest I am paying for my 1st home loan for this year is ~Rs.2,00,000.
    The rental expected is ~Rs.1,30,000. The effective Loss with interest is ~Rs.1,00,000 after excluding
    the 30% repair allowance and Property tax paid.

    The Expected annual interest on my 2nd self occupied home loan is ~3,00,000.
    I assuming that there is no limit on the tax exemption on the interest paid for the 2nd home
    loan, the total tax exception on house loan interest for this year will be Rs. 4,00,000.

    Can you please provide if I am wrong on this number?

    Thanks in advance

    Regards
    Chetan

    • Ritz P says:

      Yes, you can claim the actual interest paid as interest for the second home, while it is limited to 1.5 Lakh for the self occupied property.

  49. chandramohan says:

    Hi,
    I had a home loan that i just closed. Now I am planning to buy two flats so that on one flat I can avail 1L(80C principle) + 1.5(interest) and for another I can avail unbounded interest component.
    Please let me know if my thinking is correct.
    Also please let me know If there is any restriction on the cost of property as I will have a smaller home loan targetting 1.5L interest component and a larger loan targeting unbounded interst.

    Also please let me know if i can buy a home from my mother

    • Ritz P says:

      Yes, your thinking is correct. But you have to show the rental income from the second home in your IT returns after the permissible deductions. You can buy home from mother, but such loan principal repayment will not qualify for Section 80C deduction.

  50. Vinu says:

    Hi Sir,
    I took home loan of Rs 24 lac. Loan was sanctioned in Nov 2012 but 1st disbursement took place on 05/04/2013. Will I be eligible for 2.5 lac rebate on interest paid. this is my first loan.

  51. neeraj says:

    i am planning for a home loan.Being a tax payer i want to maximise the tax benefits.I want o know what should be the optimum time period of home loan so as to have a balance between tax rebate benefit and to avoid interest because of long tenure.please tell me the optimum time period for loan of 22 lacs.

  52. Sandeep says:

    Hi Ritz,
    I am first time house buyer.
    I stay in cityA in a rented house and bought a new house in the same city(cityA) and i LetOut the house.I took home loan of Rs 10 lakh that got sanctioned at the end of April 2013.Will i be eligible for above 1.5 lac rebate on interest paid.this is my first home loan.
    If so,
    1) can the principal repayment loan amount shown under section 80c?If yes, is the amount shown is apart from 1L savings. and
    2)Interest amount shud be shown under section 24?

    Thanks in Advance
    Regards,
    Sandeep

    • Ritz P says:

      No, the extra amount is eligible only for first time buyers. 1 lakh limit in Section 80C is for all savings, it is not extra. Yes, interest will qualify under Sec. 24.

  53. Neelam says:

    Hi ,
    I am staying at my parent’s home and paying them a rent. I have my own flat in the same city which is given on rent, Can you please clarify below doubts.
    1) I can claim HRA as well as tax benefits on House loan. Please let me know if the rent receipt is enough ( signed by Parents ) to claim HRA.
    2) Can I also claim Loss on Let out propery..
    Thanks in advance.

    • Ritz P says:

      1. You can claim both provided you can convince the assessing officer the reason for staying in rented house while having own flat.

  54. VIJAY says:

    I had taken homeloan in October-12. The distance between my job location & flat is far, so that I had given my purchased flat on rent and I am staying at other location by paying rent. I am getting less rent than that I am paying.
    For current year I am claiming interest of 1.5 lack towards Sec.24 and remaining amount towards 80C. Please guide me for :
    1) As I am paying rent, can I get benefit of HRA exemption also?
    2) Is it necessary to add received rent into my income?

    • Ritz P says:

      You have to show the rent received as income. also, you have to convince your assessing officer the reason for staying on rent in the same city.

  55. i am going to purchase a new flat under loan this month. and sell the old flat under loan in the next month. can i get interest rebate for 1.50 or 2.50 lakhs.

  56. KP says:

    Hi:

    I currently own an apartment (registered in my spouse and my name) which i have completely paid WITHOUT availing any loan.

    I would now like to go for another property worth between 50-60 Lacs. This would be a property i would not reside in, but use this for investment purpose, and rent it out in the future.

    Please advise, if i can avail a tax benefit for the 2nd property, and what amount of loan should i avail to get a tax benefit.

    Could my wife and myself opt for a joint home loan ?, and achieve a better tax benefit ?

    • Ritz P says:

      Yes, you can avail the tax benefits for the second loan for the actual interest paid on the loan. But you have to show the income from that house in your IT returns after the permissible deductions.

  57. siddharth says:

    Hi,

    I have taken a home loan of 38L for my first house, the emi’s are already started from july 1st 2013..but the occupation will be sometime in feb-14.
    I would like to know how much tax benefit i can get??…where[which section] and what documents to be shown for the income tax benefits….
    Please let me know in this regard.

  58. Shelley says:

    Hi!
    A. I own an apartment (registered in my spouse and my name) which I have paid fully LY and have also enjoyed loan benefits on the same.
    B. 3 years back I bought another house(jointly in my wife and my name), for which I’m getting possession next month. Interest paid on the said property loan is approx. 10 Lacs.
    C. Also, apart from this I’m planing to buy a third house(ready to move in, in my wife and my mother’s name, though I’ll be the co-borrower & not co-owner)

    Please advise,
    1. a) if i can avail a tax benefit for the 2nd property and to what extent? Given my understanding that it has to be in tranches of 5 and to max limit of Rs 1.50 Lac per tranche. How will I avail the benefit of entire 10 lac?
    1. b) Since i do not have any loan running on the first house can i claim both principal and interest as deduction for the 2nd house along with the tranche benefits?
    2. Since I’m not a co-owner in the third property however a co-borrower, can i still claim tax benefit on this house?

    Many thanks!

  59. Inder says:

    HI

    I own a house and taking tax benefit for housing loan interest paid on this.
    Recently i have bought another house on loan and its under construction.
    pls advise if i can avail tax benefit on interest paid for new house as well, how much is the limit and under which heading.

    regards
    Inder

    • Ritz P says:

      For the second house you can claim deduction for the full amount paid as interest. But you have to add the income from this house.

  60. uttam says:

    Dear Sir,

    I have taken the housing loan for which first disbursement starts from Sept 12 & Till Match 13 I paid 60000 interest. The possession is likely in Oct 13. Again from April 13 to Nov 13 I will pay the interest @100000 & From Dec 13 to March 14 I will pay interest @65000.. So to avail the income tax benefit in future I have following question
    1. Can I claim full interest paid from April 13 to March 14 for income tax for FY 13-14 ? as possession is got in same financial year. & from next FY I consider 60000/5=12000/year as a pre EMI tax benefit for 5 years?
    2. Or I can take benefit of interest that will be paid after possession month –Nov 13 to March 14 only ie. 65000 ? & in this case before Nov 13 interest paid all should be consider as per EMI & from next FY the tax benefit for Pre EMI can be taken like (60000+100000)/5=32000/year..

    Or pl clarify in your view how I should go ahead for the max tax benefit in future.

  61. D Roy says:

    I have a home loan of 7.5 lakhs and an additional home loan of 7.3 lakhs on the same property. Will the total interest paid come within the exemption of 1.5 lakhs or the second loan will qualify as a second (separate) home loan?

  62. Rajiv says:

    Hi Ritz,
    I am staying on rent and intend to continue here. I have 70lacs to invest and have finalised two flats, one ready for possession and one under construction. Cost of each flat is 70lacs. My option is to go for a loan for either flat. Negating the principle amount benefit, which would be a better option for maximum tax benefit : 1. Avail loan for the completed house which can be given on rent or 2. Avail loan for the flat under construction.

  63. Mayuri says:

    Hi,
    My huband and I are co-borrorwers for an under-construction flat for 1 crore on 80% home loan. Are we elegible for any tax benefit this year as the property in under-costruction? The principal payement for 2013-2014 is 2L and interest in n13-14 is 8L for us?

    • Ritz P says:

      you can claim the interest paid prior to occupation in 5 equal installments starting from the year of occupation. But together with the interest paid in that year, it is capped at 1.5 Lakhs per annum per person.

  64. A Bose says:

    Sir

    I had purchased a house jointly with my wife as co-applicant whose loan I am repaying and the tax benefit we are jointly taking for Interest and Principal amount.

    Now I plan to buy 2nd home in my wife’s name and I will be the co-applicant as in that case we get better interest on loan from LICHFL under bhagya laxmi scheme.

    Under such situation for purchase of second home shall be get the benefit of claiming tax under section 24 on interest paid on actuals for 2nd loan and share the benefit over and above the first loan interest (1.5 lac)?

    ILLUSTRATION:
    First home : Self + Wife (Sharing tax benefit on repayment of loan)

    Second home : Wife + Self (Can be get benefit on interest paid on actuals for 2nd loan?)

    Please clarify.

    regards.

    • Ritz P says:

      Yes, you can share the actual interest paid on the second loan for getting the deduction in the ratio of ownership of the second house. You must also show the income from that house in your returns.

  65. ADS says:

    Hi,
    I have taken a joint home loan with my wife. The complete EMIs are being deducted from my savings account only and not from my wife’s account. For both of us to claim the tax benefit of Rs. 1.5 lakhs each is it necessary that the EMIs are also paid from our individual accounts and in the ratio 50:50?

    Thanks

    • Ritz P says:

      Though it is ideal you can still claim it. Transfer 50% of the EMI’s paid from her account to your account.Keep the records for further verification.

  66. Siddhartha Joshi says:

    I am planning to buy an under construction house which will be ready in June 2015. Currently I stay in a rented apartment in the same city.

    How much tax benefit can I claim? Can I claim only HRA right now, or I can claim Rs 1.5 lakhs rebate for the interest amount along with HRA till I occupy my house?

    • Ritz P says:

      You can claim only the HRA exemption till you occupy the house. After occupation, you can claim the concession for the interest paid during the construction period in 5 equal instalments.

  67. Abhinav Bhatt says:

    I nave taken loan worth 40 for under construction flat .flat is still under construction.But by mistake i have availed tax benefit for interest for last 3 financial years .Can I payback taxes or is there any penalty
    pls suggest.

  68. Govind says:

    I am having 2 home loans running from 2009. Till this month I am a NRI and I am coming back to India by end of this month and I Will be renting an apartment which is not in the city of my Home loans.

    Can I claim the interest paid to both these loans as “loss on the property” if I show the rent as my income. Also Can I claim the HRA deduction since my properties are not in my current city of living.

  69. Bharat says:

    Sir,

    I have booked my first under construction property in 2009 and took home loan in 2010. My EMI has been started w.e.f. 2010 and I am paying 1.2 lacs interest per year. But I haven’t got the possession till date which is expected in this financial year i.e. 2013-14.
    1. How much interest rebate I can claim per year?
    2. How much the interest of previous three years 2010, 2011, 2012 can be claimed per year?
    3. Is the limit of 1.5 lac includes current year as well as previous years interest? please tell me the section of this rule.
    4. What if i didn’t get the possession till the end of this financial year?
    Please clarify my doubt.

    Thanks

    • Ritz P says:

      You can claim the interest paid prior to occupation in 5 equal yearly installments starting from the year of occupation. But along with this, the interest for tax benefit is limited to 1.5 Lakhs per year.

  70. Ritz P says:

    No, you cannot claim the tax benefits for his loan.

  71. sekhar says:

    I am planning to buy a property,flat in a apartment, for 50L with my wife and my brother-in-law as joint owners. Our share (my wife and mine) will be 50% and brother-in-law’s will be 50%.
    Can I apply loan for only my share of flat?

    Thanks.

  72. A.R.VERMA says:

    This year additional deduction of Housing Loan is allowed subject to the following criteria:-
    Loan sanction date should be on after 01.04.2013 to 31.03.2014
    Loan taken for first house & assesses does not own any residential house property on the date of sanction of the loan.
    The amount of loan sanctioned for acquisition of the residential house property does not exceed Rs. 25 lakhs.
    The value of the residential house property does not exceed Rs. 40 lakhs.
    The maximum benefit that will be allowed is Rs 100000/- for the property under Sec 80 EE.

    My case of housing loan met with above all conditions as I have taken housing loan for under construction house and the possession of the house will be probably on or before December-2014.
    Now my quarry is that can I avail the maximum benefit for this FY2013-2014 OR AY2014-2015 that will be allowed to Rs 100000/- for the property under Sec 80 EE as my EMI has been started by the financial institution (SBI BANK) since June-2013 onwards.

    Kindly give me a suitable advice please.

  73. Rahul says:

    Hi Sir,
    I took home loan of Rs 25 lac. Loan was sanctioned on 14th March 2013, but 1st disbursement took place on 10/06/2013. Will I be eligible for 2.5 lac rebate on interest paid. this is my first loan.

  74. Dipak Saha says:

    Sir,

    I and my wife own a house and are co-owner (50:50), I pay the entire EMI from my side as the loan is taken on my name, the house is on rent. My question are:-
    1. Can the rent from house be split with my wife for calculating income from HP ?
    2. Can i take the entire deduction of interest component in my name while availing rebate u/s 24.

    Pls let me know
    Regards

    • Ritz P says:

      The rental income can be divided among you two in the rato of 50:50.
      For tax benefit also, the interest paid has to be divided among two.

  75. Sripriya says:

    If a first time home buyer has a loan sanctioned for Rs. 40 lakhs adter April 2013, and later reduces the loan amount to Rs. 25 lakhs before March 2014, will he still be eligible for the extra 1 lakh interest deduction?

  76. Manohar Reddy says:

    I am a first time home buyer. My loan got sanctioned on 08/03/2013 and disbursed on 23/04/2014. Am i eligable for 1 lakh additional benifit?

    Please let me know.

  77. Manoj says:

    Hi,

    I have a property at my home town where my parents are staying and I bought another one in city last month, my question is can I claim the loan amount for the one purchased in my home town from Apr 2013-Mar 2014 and for the second one for which the EMI started from Nov 2013 and HRA for Rent paid from Apr 2013-Nov 2013 ?

    Thanks,
    Manoj

  78. rupali says:

    hi,
    feb 2013 I am purchasing a third home on loan for my brother. Me and my brother are co applicant of the said property. I am already taken a home loan benefits from my previously purchased two home loans, first home that i am using and second to be let out, taking a benefits on 80c and 24(b). And third home loan also a let out property.

    In this F.YEAR my 80c limit is full due to life insurance and principal of first home loan. my question is
    1. What is the limit of tax benefits in sec 24(b)?
    2. Can I take a second and third home loan interest benefit in sec 24(b)?
    3. In IT, taking tax benefits from third home loan?

    please guide

    • Ritz P says:

      If the proposed house is in your joint name, you can claim tax benefits for the interest paid in the loan. If you are showing the rental income from the property, there is no limit in the interest for tax concession. limit of 1.5 lakh is only for self occupied house.

  79. Shatrughan gupta says:

    Sir,

    I have taken 9 lacs and 67 thousand loan, I pay EMI 16000/month for 6 years. But at the end of year 98000-Principle amount and 90000-Interest deducted. Pl. suggest me if i reduced EMI and increased interest rate, then what will be over all benefit in Tax saving. (I pay LIC,Tution fee and PF which come under 80C)

  80. prem prakash says:

    Dear sir
    I have applied for a home loan but the property (land) is in my wifes name who is an housewife so I am only a co-borrower for the applied loan but loan has been granted entirely based on my sallry income ans EMI is paid by me so bill I eligible for tax benefit againsed the prinicipal amount and interest paid?

  81. PREM PRAKASH says:

    Dear sir
    I have applied for a home loan to make house but the property (land) is in my wife!s name who is an house wife so I am only a co-borrower for the applied loan but loan has been granted entirely based on my salary income the total EMI is paid by me so will I eligible for tax exemption against the principal amount and the interest paid against EMI!s paid?

  82. DIPTENDU SAU says:

    SIR.

    I have a loan of Rs. 24 L ( 10 L + 14 L) against under construction House Property at Kolkata. Currently I am staying at Raipur in a rented House. The above mentioned loan is also compromising of Loan Insurance of Rs. 2 L from ICICI Prudential.
    Request to confirm that whether I am eligible to get tax benefit against the Insurance Premium paid by me against the sanctioned Loan .
    I hv received certificate for Tax exemption from ICICI Prudential though my Employer is informing that I am not eligible tob get the TAX beneit against Under Construction Property.
    Pl. confirm if I am eligible under which section this will be applicable.
    Regards

  83. Aparna says:

    Sir,
    We, (Husband & I) are planning to take construction linked home loan on a property worth 80 lacs. Since RBI has declined the disbursement of Down payment home loans and encouraging Construction plans -does the pricipal & interest tax benefits be availaled only after possession or there are any changes for financial year 2014-15.
    Rgds
    Aparna

  84. VIKAS AGGARWAL says:

    Dear Sir

    I have purchase a Home in Pune in 2008 , I am enjoying home loan interest deduction as per norms . Now I have been transferred to Jaipur abt an year back and I have purchase a home here just last month . Prior to this I was additionaly getting rent deduction in Jaipur as I was leaving on rent ( Rent 18 K per month, deduction abt 12 K month ) . This new house is in same building and EMI is about 31 K Per month. How can I claim interest deduction for 2nd House . Please guide me . It is necessary as I am losing rent subsidy now

  85. Jitendra Kumar says:

    I took a home loan on 16th March 2010 of Rs.1675000 and same amount disbursed on 27th March 2010.My Flat was completed in march 2014.I took Interest benefit for Income Tax in 2013-14 first time.Now I want to know Interest paid from March 2010 to March 2013 can be claimed in five equal parts in F.Y.2014-15 onwards.

  86. payal says:

    Dear Sir,

    I have taken a home loan (34Lac) and started paying my EMI from June 2014 and my flat construction completed in same time and I shifted to occupy the house in Sep 2014. Can I claim IT rebate on both interest and principle amount? if yes, what all document I should have as a proof?

  87. i have purchased a property in march 2012 of rs 15 lakhs

    and if i sales it now in rs 40 lakhs

    then how much tax should be
    for me 2 pay as income tax

  88. Ranjan says:

    I’ve a home on loan from the bank in city A where my parents stay. I’m taking tax advantage on principal under 80C and interest (upto 2Lac) – No income from this property. This is my first property i got in 2010.

    I’m living in city B – on rent so taking tax advantage of rent.

    Planning to buy a second home (ready to move – 7 yr old) in city A – where my first property is. my wife – Homemaker/no earning would be the co-borrower. She’d put the 50% of the total amount as down payment. She’d have it as a gift from her father in the same Financial year. I’d take the loan of remaining 50% and pay 100% of the EMI. My wife’s parents would occupy this property at 0 rent – so no earning from the second property as well.

    Based on it, I’ve few questions as below –

    1) Will there be any tax on my wife as she’d get a gift amount (appx 20L) it would be invested on property in same year.

    2) Can I get tax benefits for both properties as applicable and still can get tax advantage for rental property in city B?

    3) I know that principal amount of EMI paid towards 2nd home do not get me any tax advantage, how the registration and stamp fee would be treated? also if there is any advantage to it, can it be taken in 2 to 3 years time or it has to be in the same assessment year?

    4) Can I claim tax deduction for loan processing fee – paid to the bank, title search fee – paid to the lawyer and appraisal fee – paid to the bank’s approved appraiser?

    5) if the loan amount for second home is 20L, for 20 yr @ 10.15, starting from May’15, total interest is 168160 for the financial year – TAX FREE. Can I also show it as negative income from property? so the calculation would be – rental income (0) – loss on housing property (168160) = -168160. It would make my total tax saving on second property as 168160 X 2. Is this correct assumption?

  89. Madu says:

    I have a own house in Karnataka, ground floor self occupied & rented first flloor,The rental income is shown as income & am paying tax,(No loans)
    Now i have bought a plot in joint name along with my son who is a student,by availing a loan,
    The provisional principle & interest certificate has been recd,
    Any provision exists for me to get tax benefits ?

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