Save Tax on Home Loan

Save Tax on Home Loan

• For self-occupied house property, the annual value of the house property is considered to be nil.

• Further, an individual could claim a deduction for the interest paid on the home loan( for purchase or construction) upto Rs.1.5 lakh, subject to certain conditions.

• This would result in a loss under the head house property of upto Rs.1.5lakh, which could be set off against other income.

• If the property is let out, the actual amount of housing loan interest, without limit, could be claimed as deduction. Also, an individual can claim a deduction .upto Rs. 100,000 for repayment of the principal amount u/s 80C.

Joint Benefits: This advantage gets multiplied if the property is acquired in a joint name, as each individual is entitled to claim tax benefits.

• Thus, if a husband and wife have a property with equal share, both are entitled to claim these deductions.

• There is no restriction as to who the co-owner should be and there is no limit on the number of joint owners. Property can be jointly owner with your spouse, brother or parents.

• Here, the following points merit consideration: First, the house should be bought in the joint name and proof of co-ownership should be maintained. Second, the housings loan should also be taken in joint names.

• The repayment of loan should preferably be made individually by the co-ownership should be maintained. Second, the housings loan should also be taken in joint names.

• The repayment of loan should preferably be made individually by the co-owners directly, if feasible, or from a joint bank account in which funds or repayment of loan should be contributed by the co-owners in proportion to their ownership/loan.

• All the co-owners should have their independent income sources from which the loans are re-paid.

• Typically, the tax benefits are available in proportion to the joint ownership and the loan taken by the co-owners.