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Home Loan > Tax

Tax and home loan

In India home loan is cheapest among all other loans as it attracts tax benefit on the EMI paid by you. There are many ways in which you can save total tax liability by availing a home loan. Read on to understand the tax implications on Joint Home loan, pre EMI, Under Constructed property, second Home. So save more tax by availing home loan. 1. 2. 3. 4. 5. 6. 7.

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Tax Implication on Home Loans Tax implication on joint loan Tax Planning on Pre EMI Tax implication on under constructed property 2 Homes? How they are treated for tax Deduction under Section 80C of the Income Tax Act Deduction under Section 24(b) of the Income Tax Act

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Tax Implication on Home Loans:

Home loans are the cheapest loans available in the market. May be Govt. has sniffed that, in India Real Estate is quite costly and owning a home is the most important part in each of our lives. Read on: Tax rebate on interest repayment of home loan upto s150000/-. Tax rebate on repayment of principle upto s100000/- under section 80C. However after 31st March 2012 this will be eliminated on implementation of Direct Tax Code(DTC). Back To Top

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Tax implication on joint loan:

While purchasing property, you can opt for a joint loan with your spouse. Under the Income Tax Act, tax benefits are available on home loans and the interest paid on them. In case of joint loans also, all the co-borrowers can get tax benefits. The maximum limit of Rs.1, 50,000 will apply individually to both of you (i.e. the total deduction will be limited to Rs.3, 00,000). It needs to be ensured that both should be co-owners of the property. A co-owner of a house must be a co-borrower as well. It is essential for a co-borrower to be a co-owner in order to claim tax benefits. You cannot get tax benefits if you are only a co-borrower and not a co-owner. Co-borrowers, who are also co-owners, are eligible for the tax rebate in the proportion to their share in the loan. The repayment capacity of each spouse will be taken into account while arriving at the share of the loan. The shares of the loan may be in any ratio. The tax benefits would be shared in that proportion only. You have to specify the share of the property and other loan details on a stamp paper. In case a husband and wife pay Rs.2.4lakh as interest and Rs. 100,000 as principal, each has an equal share in the borrowing, and each can claim Rs. 120,000 towards interest (subject to maximum of Rs. 150,000) and Rs. 50,000 towards principal in their respective income tax returns. The maximum tax deduction for a single borrower is Rs. 1.5 lakhs. This deduction would apply to each borrower. In case one of the co-owners does not have any income, the other co-owner should enter into an agreement with the spouse. The agreement should state that the entire repayment is met by only one borrowers income. This would ensure that the main applicant will have 100% beneficial home ownership, and consequently, he can avail all the tax benefits applicable to a single borrower. Each borrower needs a copy of a borrowers certificate. It has to be provided to claim their respective tax relief. A co-borrower should enter into a simple agreement with the spouse on stamp paper of Rs.100. This agreement should basically contain the shares of the ownership along with that of the home loan availed by the couple. The borrowers should take two copies of the interest and principal paid certificates from the bank and each can submit a copy of the certificates along with a copy of the agreement signed between them. Back To Top

Tax Planning on Pre EMI:

Pre EMI is the interest paid to the band/NBFC for partial disbursement till you get the posession of your property. You can use the home loan for tax saving only when the construction is completed. Pre-EMI is paid till the house is under construction. So, you cannot use the pre-EMI as the tax deduction source. Once the construction is completed, the total pre-EMI interest paid is shown in the five equal instalments

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Home Loan | Tax Benefits

http://way2loan.in/homeloan/home_lona_tax_benefits

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3/6/2012 12:03 PM