An individual is required to pay tax if his income exceeds taxable income. Government provides tax relief for some business and individuals who invest on which deduction is available under section 80C of the income tax Act, 1961. You can avail tax relief on home loan principal amount and interest paid. Here are some tips to claim tax relief for principal amount and interest included in your EMI.
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Deduction on principal amount
You can get tax relief on your principal amount if it is borrowed from recognized lender such as bank, financial institute or from your company where you are employed. Claim can be made for principal amount of housing loan together with other expenses such as registration fee; stamp duty etc from the financial year in which events like purchase, reconstruction, completion etc occurs. However you will not be eligible for tax relief, if principal amount is repaid before construction of your house. If you paid after completion of construction, you can claim maximum of Rs 1lakhs in a year to deduct from your taxable income.
Deduction on Interest paid
You can avail tax relief for interest paid along with your monthly EMI. You can claim your interest deduction up to Rs 1, 50,000/- .However, you need to either acquire or complete construction of property within three years from the end of the financial year in which loan is taken. Tax relief can be enjoyed if you could not occupy the house due to your business or employment and your house is not let out during the year.
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Tax relief and HRA
If you are away from your city or property due to your business or employment and your house is not let out to anybody, you are eligible for tax relief. You can claim deduction u/s 24 for interest on capital borrowed. Principal deduction qualifies u/s80-C. If your employer is providing House rent Allowance (HRA) there would be no bar u/s 10(13A). To avail deduction on home loan and get benefit of HRA, you need to prove that you stayed in rented house in another city and house was vacant for the period.
Tax relief incase of property rented
If your property is rented for the period, you can deduct the full interest amount against income from rent.
For example, If you borrowed a loan and the interest paid along with monthly
EMI is Rs1, 65, 000/-. Interest paid on Home loan = 165000
Rent per annum = 72000
Balance after deducting rent =165000-72000 = 93000
Write off Rs 93,000 as loss against your salary income and this will reduce your taxable income.
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Tax relief is available to borrowers who are continuing or making prompt payment. If you fail to make EMI payment in time, you cannot enjoy benefit. Claim can be made from only person who borrows the loan and co-borrowers can claim to extent they repay. You need to submit the certificate issued by lending bank stating the principal amount is paid. Same can produced for deduction of home loan paid.
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It is very useful. However, my case is different. I am recently retired from a Bank and am getting monthly pension. I am residing in Parsvnath Green Ville, Gurgaon on rent. My total amount of pension in a year is taxable. Will u please guide me whether I can get any rebate of rent paid by me out of my pension income as this income comes under the head ‘Salries and allowances’ under I.T.Act.
[...] Rs 2.5 lakh a year. If the proposal is accepted, tax payers will save up to Rs 31,000 a year from income tax exemption this will make purchasing home more affordable. However, tax payers can get this benefit only after [...]
Here there is a nice Article on Tax Rebate by Home Loan.For more see http://www.commonfloor.com/articles/category/property-buying/home-loan?f=ash1906
I stay in Delhi in a rented apartment, working for a ltd company, my parents stay at Asansol (WB), we don’t have any property at Asansol. I want to buy a flat (using Home loan) at Asansol for my parents to stay, however the flat will be in my name only. In that case, am I eligible to get TAX relief? Do I be eligible for deduction due to HRA at Delhi? Please help.
I have taken a loan of Rs 10,00000, Its a loan on joint account wherin iam the co-applicant, Entire EMI is paid from my account, but the home is registered on my wifes name, and she currently doesnot takes the benifit.
Can i avail the tax rebate.
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I have bought two flats in Ghaziabad and I have taken two separate home loans for both the flats. In first flat my family is staying and the second one is vacant. I am doing job in Chennai and here in Chennai I am living in rented house. Can I get tax rebate on both housing loans as well as on HRA in Chennai?
I have bought two flats in Kolkata and I have taken two separate home loans for both the flats. In first flat my family is staying and the second one is under construction. Can I get tax rebate on both housing loans ?
Hi,
I am having a home loan with my name and I have married and now my wife is also working, now instead of re-registering the property with both of us name is there any way we can claim the tax rebate on both of us name?
Hi,
I am pradyumna Dash, I would like to know that I am from orissa staying in kolkata and recently i have purchased a flat but it is underconstruction, so am staying in a rented flat. In this scenarion can i get the tax exemption on both HRA and housing loan.
Regards,
Pradyumna
[...] your tax saving plan or planning your tax saving strategies as the financial year comes to an end. Buying a property or house can also be used to reduce the tax liability to a certain [...]
[...] your tax saving plan or planning your tax saving strategies as the financial year comes to an end. Buying a property or house can also be used to reduce the tax liability to a certain [...]
i am planning a home loan in aug 2010 for a house whose construction is starting in feb 2011.to claim the tax rebate of 1.5 lac the acquisition/construction should be completed within three years from the end of the financial year in which capital was borrowed.can you please tell me by what date should the construction be completed to claim the tax benefit.
I have one House Property in Rajkot Gujarat & second House at Pune, Maharashtra - both were brought through Home loans from Bank.
I am however currently Working at Bangalore & staying in the rented house.
can I get the below benefits:
1) Tax exemption on rent paid during the year for staying in a rented house at bangalore
2) Avail of the Interest rebate tax slab of 1,50,000 for the house in Rajkot which I have not let out & consider it as Self Occupied.
3) Consider my Pune House as deemed to be let out & avail the Interest deduction from total earning (calculated on basis of notional value - 30% Std. deduction).
My flat is under constructionand the same will be completed during july’10. it is at pothery( which is after marimalinagar) i am paying loan and interest and at the same time i am paying rent in nanganallur-chennai. in this case can i claim both housing principle& interest also HRA exemption.
I have taken a loan on my house at Jalandhar.in 1999 for 20 years.
and I am paying the instalment still.
Now I have been transferred fromjalandhar to Mohali.
I have a plot at Mohali which was purchased by me in 2002.
NowI want to take another loan for cunstruction of house on my plot at Mohali.
Can I avail the benifit of interst forincome tax purpose on my both loans ?
or I can avail the benifit of interst for incometax purpose upto 150000 on my new house loan
without taking the benifit of interst in incometax rebate ofmy old house laon ?
Or I will have to pay the balance of my old house loan for taking the benifit of
interest reliaf for thepurposeof income tax.
[...] Tax benefit: If you borrow your home loan from recognized lender such as banks and leading lending company, you can get tax relief on your principal amount and interest paid along with monthly EMI. If you are away from your property or city due to your business or employment, you can get tax relief for loan paid and you will be eligible for HRA provided by your employer in that city. Know more on Saving Tax from Home Loan. [...]