Income tax on House Property

income_tax_on_home-property

Income Tax on Home

Income Tax on House Property

To get the maximum benefits and save tax you would need expert guidance. Incometaxreturnindia.com provides professional and expert Income tax guidance. To get more details you can reach us any time.

Our tax experts will help you reduce your tax liability. You can save Income tax through multiple options couple of them have been discussed below:

Income from House property is computed by taking what is called Annual Value. The annual value (in the case of a let out property) is the maximum of the following:

 

  • Rent received
  • Municipal Valuation
  • Fair Rent (as determined by the I-T department)

 

Queries on House Property

 

Que 1. I have taken home loan for my self use. How much tax deduction would I Get?.. Ravi Verma, Delhi
Reply: When ever you take housing loan. You repay housing loan through monthly EMI. This EMI has got 2 components -Interest and Principal. Both are deductible, but separately.

Maximum Interest that can be claimed as deduction to the tune of maximum of Rs 150,000/-, if the property is not let out.

Principal amount repaid can be claimed as deduction under section 80C with overall limit of Rs 1,00,000/-

Query 2. Can I save income tax by Housing loan? Sunidhi, Bangalore
Reply: Amount you pay as interest on Housing loan is deductible from you total salary.
-In case house is used for self use/Self occupied then maximum Limit is Rs 1,50,000/-

-There is no limit however if you have rented out the home to anybody and you are paying interest on housing loan. But, in this case do make sure that rent you are receiving should be added in your total income.
For example: if you have are paying Interest on housing loan of Rs 3,50,000/-, then the the whole amount can be reduced from your total salary, subject to condition that you show that you are receiving some rent from this home and you show the same in your Income Tax Return.

Query: 3. I have booked a flat with builder, possession would be given in 2 years, Can I Claim benefits of Interest I am paying now?

Reply: Interest paid will become deductible only after you have received possession of Property.
The interest paid till the date of possession is called Pre-construction interest and you can claim a 20% deduction each year, for 5 consecutive years, starting from the year in which you get the possession of the house.

Query 4: Do I get tax benefits if I have taken loan for piece of land?
Reply : No, Tax benefits for interest is only against house property not on land.

Query 5. Property is in name of my father and bank have given loan against my name. Can I claim tax benefits?
Reply :No, You have to be co- Owner in the property to avail benefits of housing loan.

Query 6. What is the maximum amount of interest can I claim as deduction, if the property is rented out?
Reply :You can get deduction of full amount in case of interest paid on rent out property. This would apply even if rent received is less then Interest paid on Housing Loan.

Query 7. Can I claim the deduction related to interest and repayment of principal housing loan in case I have 2 house property?
Reply :Yes you can claim deduction.
In case you have two housing loans for two separate house properties and if you are residing in one of the houses, Then first House is considered self occupied and its value is nil, However the other house will be considered as ‘deemed to be let out’ and the deemed rental value will be considered as taxable in the hands of the individual.

Query 8. I have taken Housing loan from Relatives, Will i get income tax benefits on interest paid?

Reply :Yes , you can take income tax benefit for Housing loan Interest even if loan is taken from your relatives. However benefit of principal repaid would be lost u/s 80C.

Query 9. My current employer , while calculating tax has not taken into account Interest paid on Housing loan? How can I claim the benefit?
Reply : You can claim this benefit. Send us your form 16 and Housing loan interest certificate. We would calculate your refund and file your return with the income tax department. This would help you to get refund of excess tax amount deducted by your employer.

Query 10. Can both Husband Wife claim exemption of Interest on Housing loan?
Reply :Yes, Both Husband and wife can claim exemption of Interest on Housing loan. Condition to be satisfied are:
a. Property should be registered in both the names
b. Housing loan should be taken in both the names.

Query 11. In Budget 2013, Deduction for housing loan has been increased to Rs 2.50 lakhs. What are conditions to avail the extra deduction of Rs 1.00 lakh?

Reply: From 01.04.2013, you will get extra deduction of Rs 1.00 lakh. Conditions to be satisfied under new Section 80EE are :

  • Additional deduction is available to only Individuals.
  • Benefit of Section 80EE available only, if you have no existing house, in your name.
  • You have bought a new house, and House cost of the house is maximum of Rs 40 lakhs
  • Loan is approved and taken after 1-4-2013,
  • Loan does not exceed  Rs 25 Lakhs
  • Then, the  Extra interest deduction that you will get is Rs 1,00,000/- under section 80EE.
  • This “temporary” scheme is for 1 year only.
  • Benefit for section 80EE is available for fresh investment for “First time house buyers”

 Query 12:  I have sold my house last year, what is the income tax implication? How is long term and Short term capital gain calculated?

Reply: On Sale of house, if property is held for less than 36 months then it is classified as short capital gain and tax at normal rate ( ie as per income tax slab ) is payable.

If Property is held for more than 36 months then, it is classified as long term capital gain and tax at 20% is payable.

However you can save income tax on long term capital gain by proper income tax planning. For more details on tax planning on capital gain visit: How to save Income tax on sale of house property

Query 13:  I have Sold my house this year, am i suppose to deduct TDS on sale value of house property?

Reply: TDS on sale of property is deductible by buyer, if value is more than Rs 50 lacs. No TDS is require to be deducted if value of property is less than Rs 50 lacs. For more details visit: TDS on immovable property to be deducted by buyer at 1%

82 Responses to Income tax on House Property

  1. venkata basaveswara rao putti says:

    I have two houses one is self occupied second one is rented out shall i claim income tax rebate on both houses home loans ?

  2. pawan kumar says:

    Do i get tax benefits if i have taken loan for a plot for building a home for me….

    • Income Tax Buddy says:

      In order to take benefit on interest on plot, you must complete the construction on plot and take possession certificate.

  3. Ajay Narasimhan says:

    While spouses can claim exemption of Interest on Housing loan. Is a similar exemption available to other family members?
    My mother and I have
    a. Property should be r registered in both the names
    b. Housing loan taken in both the names.

    Can we both avail exemption on Interest and Principal repayment?

  4. Pandey says:

    I am taking home loan and buying my first home. If I show this home on rent, then can I claim exemption on total interest paid (instead of 1,50,000 limit)?
    Or this facility is applied only from the second home. ?

  5. mahiraj says:

    I have taken a housing loan for underconstruction property in chandigarh. I am paying an pre emi of Rs 17000 every month and possession will be given in 2015. thereafter will the EMI start. Can I get rebate on Pre EMI which I am paying now, if so pls tell me the details, if not then when.

    • Income Tax Buddy says:

      Interest paid during pre-construction period, is not allowed during the construction period. You can however take benefit after you get the possession after you get the possession of the property. This benefit you can take in 5 equal installments.

      • SHRIKANT says:

        Sir, I have taken Home Loan to purchase flat in Pune in Aug 2011 (FY 2011-12). I got possession in Feb 2014 (FY 2013-14). Bank provided Interest certificate for FY 2011-12 (as Pre-EMI), FY 2012-13 (as Pre-EMI) and FY 2013-14 (as EMI). Please guide me 1) How will I calculate I-T rebate of interest duduction after possesion for FY 2013-14? 2) As my flat was in possession in Feb 2014, shall I take into consideration of Pre-constrution EMI interest (i.e. aggregate of from Aril 2013 to Jan 2014 for current FY 2013-14 and previous two years) or Pre-EMI as stated by bank ? 3) I am staying in Mumbai in a rented flat. I plan to give flat in Pune immediately on rent from March 2014. My interest for the current FY exceeds 2.3 lakh, can I claim full deduction of interest from rental income as I am givng flat on rent ? or only 1.5 Lakh ? If I’m gonna claim unlimited interest for FY 2013-14, Is it correct that income from property will be only for 1 or 2 months (i.e. Feb and March 2014) rental value (for let out property) since I got possession in the month of Feb. 2014? Please help. Thanks for valuable guidance in advance.

  6. Sree says:

    I have a LAP on my name and my father is the co-applicant, however the property is registered on my father’s name. Can i still claim the income tax benefit? EMI is being deducted from my savings account.

    • Income Tax Buddy says:

      Income tax benefit can be taken only if you are owner of the property. In your case, since your father is owner, you cannot take interest benefit on this LAP(Loan against property)

  7. vidya gupta says:

    We bought house from builder & taken home loan from bank. We did not opt for Moratorium period & from the beginning we have started our EMI. Home is in construction phase & we will get it after 2 years. Can we not claim for the IT benefit?

    • Income Tax Buddy says:

      Interest Paid by you during construction period is called as pre-construction interest. You can take benefit only after you get possession of house property. After getting possession, you can claim benefit for next 5 years in 5 equal installments.

      • Jyothi Bhuvanraj says:

        This means that the same amount of interest totalled up is divided by 5 and paid back across the coming 5 yrs of possession. This also means that the time value of money is not taken into consideration while payback where the same interest monies would have grown by a certain %.

  8. Harish Kulkarni says:

    Can i claim the interest components as my tax deduction , if I not taken the possession.

  9. Tax exemption on the Principal amount on the Home loan says:

    My EMI is Rs.26000/- per month. I did not got the possession of the flat. Can I get the exemption on the principal amount which might be around 5000/- per month? If yes, what document I need to show? Thanks a lot !!!

    • Income Tax Buddy says:

      For under Construction property, you can not get any income tax benefit. You can get Income tax benefit for both interest and principal repayment, only after possession of the house property.

  10. ka says:

    Hi
    I have taken a house loan and my wife is co-applicant of the loan
    Property is registered in both of our name
    Can we both avail income tax deduction

    if yes how much i and my wife can declare

    As per rule for intrest component its 1.5 lac
    can we declare 1.5 lac for both of us (i am paying 3.5 as interest) or its just 75 thousand each

  11. David Jose says:

    Can the pre-emi interest claimed after possession (in equal amount in 5 years) be above the cut-off limit of Rs.150000.?
    ie; If I my pre-emi(interest)/5 comes to about say 25,000 and my EMI interest (after possession) is 150000, can i claim a total of Rs.175000 ?

  12. Sandesh Kumar says:

    Can I claim the municipal taxes paid on the property that I rented as a deduction in addition to claiming 30% as deduction for repairs, maintenance, etc.?

  13. anu says:

    Hi,

    I have a self occupied property on which we dont have any loan. Now we want to buy a second house, which we are planning to give on rent , but at the same time we both (me and my spouse) want to avail tax benefit. In this case would there be any limit on interest to avail tax benefit also could u pls let us know how both of us can avail maximum tax benefits?

    • Income Tax Buddy says:

      Anu,for your second house both of you will get Income tax benefit. Please make sure that both of your names are included in property papers, Loan Agreement and both of you make make payments for downpayments , EMI in ratio you decide among yourself.

      • anu says:

        Can we avail the tax benefit on the entire interest which we are paying p.a. (as second home is considered as Let out property?)

  14. pruthvi says:

    I have a flat in Bangalore (home loan currently exists) which is occupied by my parents and currently I am staying in rented flat in Mumbai.
    Can I claim both HRA benefits as well as home loan benefits (Interest + Principle)? How?

  15. DHIRAJ H M says:

    My wife was working earlier and was claiming Tax rebate against the Home loan repayment for a house which is registered in her name. Now, she has left the job and has no income to claim for Home loan tax rebate. The pre-payments are now made by me by transferring funds to her account, So can I claim the tax rebate henceforth, by any means?
    I would like to add further that I am not even the co-applicant for the home loan, as this was an unforeseen condition for us.

  16. Deepak says:

    Sir,
    I am a U.P. state govt servant and residing in a government staff quarter in Lucknow. In this financial year I’ve taken a home loan to purchase a house in Lucknow. I’ve paid around Rs. 1,75,000/- as interest and Rs. 25,000/- as principal amount towards loan in the financial year 2012-2013. When I was consulted the staff who takes care of Income Tax issues, said that you can not avail this for tax exemption as you are staying in the government staff quarter and also you are not occupied in your new house. Currently my new house is vacant and I am planning to move in a few months. As I am residing in a government staff quarter, I am not receiving HRA. Please advice me how can I avail the tax deductions u/s 24 for EMI interest and u/s 80 for EMI principal.

    • Income Tax Buddy says:

      Deepak, If you have got the possession, then show that you have given the property on rent and claim full benefit for interest and principal repayment.

  17. Kiran says:

    Sir,
    My wife and sister are co-owners for a site. Now we have started house construction without loan. Both my sister and my wife are house wife and does not have any income. Now we are planning to take loan and me being co-applicant for loan along with my wife but i am not a co-owner of the property. Will I be able to claim tax benefits for loan interest?
    Please advice.

  18. joy says:

    I plan to avail a home loan from SBI for purchasing a plot and construction of a house in it. Will I get IT rebate for the interest for the whole amount upto 1.5 L or above as the case may be

    • Income Tax Buddy says:

      If you occupy this house for self use then you will get 1.5 lacs as deduction. If you rent-out this property then you will get full benefit for interest on housing loan paid.

  19. Arun Kumar Pillai says:

    Property and home loan is in my wife’s name,she is not working, I am making the payment form our joint account , she is not working, Can i get the can i claim the tax benefit?

  20. EESH BHATIA says:

    I have a housing loan of 25 lacs taken last year, the same is having 3 coborrowers, me, my dad & my mom. Housing Loan EMI is paid by only me from my sallary account, but the property is on the name of my dad & my mom, My question is-
    1. Can i claim the interest under my ITR.
    2. If i can Claim, upto what interest is aplicable as it’s just the start of loan & i am paying of about 2.5 lacs of interest.

    • Income Tax Buddy says:

      Yes you can claim the whole interest amount for loan. To minimise the income tax liablity, make sure that highest tax payer takes maximum home loan benefit.

  21. chandreshcb says:

    Hi, I have only one hp (house property) in my name which is in Mumbai against which I have a home loan. I am staying in rental house in Pune due to employment. I am claiming HRA as well as 150K deduction as Interest on housing loan.
    If in FY 12-13 this property was vacant and hence was SOP (Self occupied Property),Now in FY 13-14 I have actually let out this property and want to claim loss in house property (as my home loan interest is much higher, even higher than 150K cap) which I can set off against my salary income calculated as per section 24.
    Now my questions are;
    1) Is this permissible as per Income Tax Act?
    2) Can I show the same property as SOP in one year and LOP in another year. Also pls let me know if in next year it is not let out then will it be considered as LOP or SOP, Can I change the status of house property as per let out or not?

    • Income Tax Buddy says:

      Yes, it is permissible under income tax act. There is no restriction, status of house property can change on year to year basis

  22. chandreshcb says:

    thanks a lot for confirmation….!!!!

  23. jyothi says:

    Can i claim tax benefit for the interest on bank loan paid by mother from my salary and the property is in the name of my mother?

  24. Balakrishna says:

    I am a first time buyer, planning to buy 2 houses/flats of 20 lakh each. currently working in a different city and claiming HRA. can i claim tax benifit on interest & principal paid for both the properties upto tax limit allowed.

  25. Jayesh Soni says:

    I am co-borrower of home loan taken by my father. The propery is on my father’s name.

    The primeum and interest amount is debited from my bank account.

    So in this case, Can i eligible for tax deduction ?

  26. dilip says:

    sir,
    i have taken a home loan with wife as co-owner as well as co-borrower. can i claim whole tax benefit only to me on interest paid simultaneously distributing rental income with wife. i am paying full EMI from my salary account.

    • Tax Dost says:

      Since you are co-owner and co -borrower, take loan benefit in income tax return according to ratio of ownership

  27. dilip says:

    is it compulsory that deduction of interest on loan should be according to ratio of ownership? is there no option where only one owner can claim whole benefit?

  28. RRao says:

    I have a home at my native place where i am paying 5 lacs as interest and 1 lakh as principal. This property is let out for 1.2 lacs for an year.
    I am in a different city for employment sake.
    I can claim both HRA and Home Loan principal and interest.
    Can i claim the complete intrest after rent received which is 3.8 (5-1.2) lacs as tax exempt

    Thanks

  29. pooja says:

    hello,
    I am filing my tax online. I want to loss of interest from home loan and principal amount as my employer didnt consider the above.I want to confirm two things
    1. I am using itr2 to file my returns since i need to file for home loan too but i have no capital gains to file.
    2. Along with the acknowledgement i will need to send the form 16 and certificate of emi and index 2 copy for principal amount. is that correct ?

  30. Bangalore says:

    I have sold a property in my hometown and have received the amount in my bank ( Sep 12)..but we did not have any sale registration and only on a sheet of paper and agreement was drawn to show that I have sold the said property . What is that legal process to get it registered we are now in July13 should I show the house sold in Last Fy or should get it registered and show in this FY for my Income tax purposed

  31. Madhu says:

    I didn’t claim interest on pre construction period for 4 years. can i claim in a single shot this year?

  32. Shekhar says:

    I need your advice on the following scenario.
    I have a flat in Bangalore with a join ownership with my wife. I am also co-borrower. The flat is on rent.

    We used to share the EMI and tax benefits earlier. She is not working from last one year and I am the only one paying EMIs.

    I think she will not be able to claim any benefits as there is no income. Can I claim the 100% interest and principal as I have paid the EMIs? What should be done with the rent? Should we distribute as income or should I show 100%?

    Appreciate your advice on this.

  33. rajendra kumar says:

    sir/ madam
    please tell me,” am i eligible to take tax benefit for home loan for construction on my father’s name property and loan is given on basis of my salary and my father does not take any tax benefit. loan is being paid by me.”.

  34. DEEPAK YADAV says:

    I am living at Faridbabad Haryana , and booked a flat in 2009 and apply for loan last year and paying EMI for this But stil the house is not delivered and I am livning in rented house here,
    I have another house in jointly with my wife at Mathura UP, About 150 kms from my current location , for that also I have taken loan , I want to take the tax benefit for all three situation i.e home loan benefit & rent given , Please advice

    • Tax Dost says:

      You can claim HRA for house in faridabad and Housing loan benefit in Mathura. However for under construction house you can claim tax benefit only after possession.

  35. s.s.panwar says:

    I am raj. gov. employee.I am receiving HRA @10% of basic salary because I am residing in a rented house.I have a home loan and pay ing interest and pricipal amount.In my house my parents resides from 2010 till now.my question is Can i get the benefit of HRA as well as interest and principal amount in income tax.

  36. sarabjeet singh says:

    I have a flat A in Navimumbai worth 35 lacs (with loan of 10 lacs ) and have purchased another flat B in Thane (with loan of 75 lacs ). Both properties are in ready possession. Since i have my office in mumbai. Can i claim HRA, show the 1st and 2nd property let out ?
    Also since i would be eligible for incometax rebate of 1 lacs towards principal and 1.5 lacs towards interest towards Flat A . Would like to know if i can claim the additional interest born on Flat B which would comparatively be high approx (5-7 lacs per annum). Is there any limit on the interest to be claimed on FLat B

  37. Ansar says:

    We have taken the home loan, owner is my father and ECS deductions are from my salary account.
    My father is Applicant and my self as Co-Applicant.
    Can I get the claim on income tax.

  38. Sharath says:

    Hi,
    This is not directly tax related. I could not find any explicit info on this on the net and hence posting this query.
    Does one have to seek permission from the bank which has provided for the home loan, before renting out a house? I am an Indian national and am aware of the restrictions on NRI s letting property out – do not wish the two to be confused.
    Please advise?

  39. Abhishek says:

    Dear Sir,

    I’ve taken loan in 3 installments in april 2007, may 2008, feb 2009. Now house construction completed on 12-04-2013. I
    This house is self occupied by me. This is my only house.
    As there is a condition for completion of construction within 3 years from the end of financial year in which money is borrowed, Whether I’ll get deduction of Rs. 150000?

  40. jai says:

    What’s the procedure to exempt tax benefit when both I and my wife are co owners of the house. Do we need to submit any document ,if yes to whom.

  41. Amit says:

    Hello,

    I had purchased a property in 2011 November through Home Loan.
    I had taken loan for a flat in another under construction building.

    For the second home loan, I have to repay my first loan completely.
    I had taken the home loan tax benifits in last three years of home loan.

    As I had repaid the first home loan before 5 years, Do I need to return the deductions taken in last three years?

    Is there any Income Tax rule to keep paying the home loan for atleast 5 years in order to get tax exemption?
    pls guide

  42. rajeev says:

    I have purchased a plot (but did not constructed a house) in 2009 and now in 2014 i purchased a flat on loan, can i claim income tax rebate on home loan.

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