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Get Tax Rebate from Your Home Loan

Comments(55) Sub Category:Home loan,Property Buying Posted On: Jun 12, 2009

An individual is required to pay tax if his/her income exceeds taxable income. Government provides tax relief for some businesses and individuals who are eligible for deductions 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.

Home loan Tax savings on home loan

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.

Save on Tax payments with your home loan Home loan

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.

CF Expert

Having any query regarding Home Loan? Let our Expert help you. Click here.

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.

 

55 Responses to “Get Tax Rebate from Your Home Loan”

  1. Nawal Kishore Gupta says:

    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.

    • Meena Niwas says:

      i want to purchage plot . what i ilegible income tax rebate on?

      • Rakesh Hp says:

        @Meena Niwas: There is no tax deduction if the loan is taken to buy a plot or land. Therefore you are not eligible for Income tax rebate if loan taken for buying land or plot. But, if you take a loan to build a house on that plot or land, then you can get a tax break. According to source, if you are buying a plot or land for constructing home, you can get a tax break. In such case, you can combine the amount for buying land and amount for construction together and you will get the tax benefit on the entire amount.

        Thanking you

        Rakesh HP

  2. Sudhir says:

    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

  3. Home Loan for Apartments says:

    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

  4. Saurabh Ray says:

    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.

  5. Rajnish Sharma says:

    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.

  6. Cris says:

    Fantastic post, I’ve just subscribed to your feed, you’ve earned yourself a fan with this post.

  7. MOHAMMAD YAHIA says:

    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?

    • Dulal Chandra Nayak says:

      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 ?

  8. Prasad says:

    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?

    • Rakesh Hp says:

      @Prasad

      Your wife cannot claim tax benefit on home loan as she is not a owner of the said property or a co-borrower to the loan. Only owner or co-borrower to the loan can claim the tax rebate.

      Thank you

      Rakesh HP

  9. Pradyumna says:

    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

    • Rakesh HP says:

      @Pradyumna:

      An HRA allowance is allowed to any person who is staying in a rented property and the rent should exceed 10% of the basic salary. However HRA and home loan provisions are two different issues as far as the Income Tax Act is concerned and one does not influence the other.

      If you have taken a home loan and you are residing on a rented property because your home is not ready for use, then in such a case you are entitled to both tax benefits on principal repayment and interest payment on home loans as well as the HRA benefit. However accordint to the source, the claim of tax benefits on home loans can be made only when the home is ready for use in that financial year and once the home is ready to live, the HRA benefit stops.

      Thanking you
      Rakesh HP

  10. A house to reduce the tax liability « Properties in India says:

    [...] 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 [...]

  11. ashish says:

    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.

  12. Niranjan says:

    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).

  13. chandrasekaran says:

    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.

  14. sonia soni says:

    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.

  15. harsh says:

    Dear Sir,

    I booked a flat for around 19 lakhs, in last year April (2010). I had applied and got home loan sanctioned from SBI. I chose to start the EMIs right away. The EMIs(full EMI, not pre-EMI) started in June 2010. Till now I have paid around 8 full EMIs. Total of around Rs 20,000 as principal and Rs.50,000 as interest till now.
    The construction was supposed to be completed by Jan, 2011. But because of some labour problems for builder, he’s now telling that he’ll give in March 2011. And FYI, we have done agreement for sale in April 2010 and I had paid around 18,800 as registration & stamp duty of Agreement.

    Now I have some questions regarding tax benefits:
    1. As the flat is still under construction, can I get tax benefits for pricipal payment(20K) and registration of agreement for sale (18.8K) under section 80C? I know its not possible in case of interest payment unless I do sale deed, registration and get occupation certificate of flat from builder.
    2. He’s telling that he’ll give it in March 2011. What if it gets delayed and doesn’t happen in this financial year (2010-11)? Can I anticipate and give a probable date for income tax computation in my company, as they are asking for IT proofs for form-16 preparation…
    3. Please confirm whether I can get tax benefits for principal and registration charges (together around 39K)…
    4. If I do sale deed and registration in this financial year and if it doesn’t get reflected in form-16, can I later declare the interest portion in IT returns? is it possible?

    FYI. I’am yet to get the possession of flat.
    Your timely response will be greatly appreciated.

    Thanks,
    Harsh

  16. Kgv 6636@gmail.com says:

    i am paying housing loan but the property in my fathers name shall get full tax exemption?if not what is the solution

    • Rakesh Hp says:

      Dear Sir,

      Since the property is in your father’s name and you are not a co-borrower to the loan, you will not get tax deduction benefits on the home loan. Even if any bank or financial institute claims to give benefits from its own side then you must get information about it in print so that later on you don’t find difficulty.

      Thanking you

      Rakesh HP

      • sachin Vij says:

        I am paying home loan and property is registered on my Mothers name. Is there any way i get the rebate on interest and principal? Please tell me the alternatives also.

  17. Shilpa Vitmal says:

    I am a pvt. ltd. co. & my property is rented. I want to know whether i will get 100% benefit or Rs. 150000/- of interest paid on loan taken for development of my property . Pls. give me guidence

  18. Gaurav says:

    Dear Sir

    I have taken housing loan of 28.5lacs in march 2010 jointly with my brother. I am paying the 100% amount of EMIs monthly. Can i claim the full interest (upto 1.5 lacs) and full principal amount (1 lac) as my employer finance personnel said that laon and property share is 50% so i can claim only 50% although i have submitted the declaration given by my brother that he is not claiming any benefit for this financial year and full EMI is being paid by me. Still my employer is allowing only 50%. Is it correct or not??? I there any clause in IT act for this??? I was looking in section 26, 23 and 24B but it is not written clearly anywhere. Kindly reply please.

  19. Jeetu says:

    I have one House Property in andheri Mumbai & second House at Pune, Maharashtra – both were brought through Home loans from Bank.
    I am however currently Working at Delhi & 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 delhi
    2) Avail of the Interest rebate tax slab of 1,50,000 for the house in andheri 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).

  20. car loan says:

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  21. Pension Loan says:

    While applying for home loan you have to do homework on interest rate and tenure of home loan etc. The only difference in closing home loan is that your lender or banks will handover you the documents stating that you do not have any outstanding dues.

  22. Kasi316 says:

    Me and my mom have joint home loan and joint owners of the home.We both stay together.

    I have paid my home loan that i have taken for the house. I still Now
    can i pay rent to my mom and claim HRA. My mom has no income , i can
    file income tax return for her for this rental income.

    is this allowed ???

  23. property birmingham says:

    If you
    are away from your city or property due to your business or employment and
    your house is not let out to anybody.This is good.I like this one.Thanks to
    share this blog.

  24. Anonymous says:

    There are a number
    of advantages to taking out a conventional home loan which can make it a
    sound choice for home buyers, whether they are financing the purchase of a
    first home or buying additional real estate.Well Thanks a lot for
    sharing.Keep sharing as always.

    • Sarah says:

      Agree that a conventional home loan is often the best choice, but unfortunately many people are to tempted by the many new and confusing choices available.

  25. architects midlands says:

    Well written article.I appreciate your writing skills.Its great.Thanks for this nice post.Its really very helpful for us in getting some tax relief from home loan.You have done a great  job by sharing this post with us.I like this post.Keep sharing with us in future too.

  26. Jaipooja5 says:

    We have taken a property loan for Repair and construction and its on my mothers name. If i have to claim tax benefit for it than, i should be a co borrower of the loan.  should bank provide any certificate that im co-owner ? how much maximum percentage share i avail being a co-owner ?

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  28. GoodlettJacot says:

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  29. Paul says:

    Whoah this blog is wonderful i love reading your articles. Keep up the good work! You know, a lot of individuals are hunting around for this info, you can aid them greatly.

  30. Ashok says:

    Hello,
    I have purchased 2 houses in 2 different cities.
    My parents are staying in one house.
    2nd house is in 2nd city but due to office distance i m not staying in it.
    I m staying in rented house. Can i claim tax benefit against home loan of both homes and also claim HRA.

  31. Kymberly Loessberg says:

    Thank you spreading most of these valuable facts. Ones content Tax Rebate, Tax Savings with Home Loan and Property Loan definitely aids me a bunch.

  32. Sanober says:

    Hi,

    I have bought a flat in lonavala but i live in mumbai with my parents, the flat purchased is on loan. Every year i claim HRA and show principal amt of house loan under 1 lac bracket and 1.5 lacs as interest.

    This year i have paid 2.5 lac as interest to the bank out of which I have shown 1.5 lacs as interest. Can you guide me how can I show balance 1 lac interest + munciple taxes paid as loss on house property?

    What proofs are required to submit in the company if the rent received during the year is bank transfer?

    Looking forward for your reply.

  33. surya says:

    ihave given my residential house for rent . The monthoy renbt is 10,000 and maintainance charages is 10,000, is it necessary I have show income from house property as 240,000 or I have to show only 120,000 only. please calrify

  34. Vinod says:

    Hello,

    i am paying EMIS for HBL(house banking Loan) but the ownership of the property is in my father’s name and my father is not claiming any tax benefits. And also i got housing loan interest certificate from the Bank stating me and my father can claim the tax benefit for the interest paid on HBL for this year.

    Note: We jointly applied for the loan.

    Accounts department is not accepting this Interest certificate issued by bank they are saying i should be owner/co-owner of the property. I don’t have any document to produce as ownership of the property except Certificate from Bank. And now i am in trouble after paying all the emi’s throughout the year and also need to pay the tax which should be benefited.

    Can anyone suggest how to prove that i am eligible for to get the tax benefit on HBL?

    Any suggestions is greatly appreciated.

  35. sharvari s shirolkar says:

    I had purchased a flat of rs 16 lakhs in navi mumbai.i had taken loan of rs 8laks 80 thousand from SBI my EMI Iis 8990 pm .my flat is under constrction can i get income tax benefit for this financial year?? on houing loan. pl advice

  36. P Gandhi says:

    Hi,

    I have a case. I have bought second home in the same city. I am the owner. I am paying EMI from my account. In loan application my wife is co-applicant or co-borrower. In this case can she claims tax exemption???

    Pls revert asap as I have to submite IT proofs.

  37. Vishvendra says:

    I along with my wife is owning a home. We have taken a bank loan which is repiad by both of us jointly. I would like to know, whether the principal and interest paid by us on bank loan will be shared with a fixed percentage or not for the relief in income tax.

  38. gaurav says:

    i m buying a flat in meerut worth 17.5 lac and i have been sanctioned a loan of 15 lac. emi is 14985/- . i want to know wht all documents are required to get it rebate on home loan while filing my it returns

  39. Rodger Christo says:

    wonderful site!! You could start many more. I love all the info offered. I will stay tuned.

  40. Sumant says:

    Hi,

    I have taken two loans. One in my native where my parents stay and other in Pune where i am staying. can i avail tax benefit for both?

    Regards
    Sumant

  41. Benito Szypowski says:

    The cover is what drew me in. It is so different and attractive

  42. Akhilesh Kumar says:

    My wife is a housewife. She was having a flat, which was allotted to her in draw in 2002 and paid in the cost in installments spread over 2 years. The total amount paid by her to acquire the flat is Rs. 433000/- She sold the flat in Sept 2011 for Rs. 1000000/-
    Now she has purchased a flat costing Rs. 1400000/- She is having only 1000000/- and being a housewife no one willing to give her loan. She has taken a loan in her husband name installments and her husband will pay interest. Her husband is a taxpayer.
    Now the question is whether her husband entitles to claim the tax relief?

  43. Deepak Gupta says:

    Hi,

    I have taken a home loan against a 3 bhk flat around 4 years back.
    I bought this flat from builder in pre-launched. Now I have done the entire payment (except stamp duty & registration) of my flat and got the possession.

    When I am asking to get home loan rebate (on principle & interest), my employer is asking me to produce registered sale deed agreement.
    Since all the flats are not completed yet I am unable to register my flat.

    I wanted to know that is it really mandatory to have sale deed agreement in order to get income tax rebate on home loan. if yes do i have any alternate?
    FYi. I have all documents except registered sale deed agreement i.e bank loan sanction letter, sale agreement, possession letter, Bank certificate for re-payment.

    Many Thanks,
    Deepak

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