Income Tax on House Property
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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.
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