Deduction of Housing Loan Interest and Principal

This query is : Resolved

Ravi Kiran (Querist)
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27 May 2008 Dear Sir,

One of our Employee has taken two Separate House.
The Loan taken for House No 1 is less and it is self occupied.

The Loan taken for House No 2 is More and it is unoccupied and it is not given on rent also

Since the employee want to take the Interest Exemption and deduction of Principal on Housing Loan taken on House NO 2 since he paying more Interest and Principal as compare to House NO 1 Can he avail the exemption forthe house no 2 even though it is unoccupied not given on rent also.

Regards

Ravikiran Konda

CA. Vineet Grover

CA. Vineet Grover (Expert)
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27 May 2008 Hi ravi,

As both the house property is self occupied, it is the discretion of the assessee to claim any one as self occupied.

Again, the 2nd house shall be treated as deemed to be let out. i.e tax has to be paid on the notional rent applicable for that area.

Rgds/
Vineet

CA. Yayati Tyagi

CA. Yayati Tyagi (Expert)
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27 May 2008 house no. 1: self occupied

income from house property: nil
interest allowable : max. 1.5 lacs
principal : deduction u/s 80C available (max. 1 lac including house no. 2)

house no. 2 : vacant

income from house property: notional income chargeable to tax
interest allowable : no limit
principal : deduction u/s 80C available (max 1 lac including house no. 1)

assessee can cliam deduction on two housing loans provided interest cap of 1.5 lac for self occupied house and principal repayment max 1 lac for all houses

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R.V.RAO

R.V.RAO (Expert)
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27 May 2008 I AGREE WITH SRI TYAGI.AND I WISH TO ADD THAT INTEREST ON HOUSING LOANS CAN BE CLAIMED ON BOTH HOUSES.
IN RESPECT OF SELF OCCUPIED HOUSE THE INTEREST ALLOWED UNDER SEC 24 AS DEDUCTION IS LIMITED TO RS. 1.5 LAKHS.
IN RESPECT OF LET OUT HOUSE OR WHERE NOTIONAL INCOME IS TAKEN AS INCOME FROM HOUSE PROPERTY ,THERE IS NO MAXIMUM CEILING ON CLAIM OF INTEREST.THIS IS AGREED BY ALL OF US.
IAM AFRAID THAT THE WORDING USED IN SEC 80 C FOR CLAIMING PRINCIPAL DEDUCTION IS "A HOUSE ".THEREFORE IT IS MY SUBMISSION THAT 80 C DEDUCTION CLAIM WILL BE ALLOWED ONLY FOR ONE HOUSE NOT FOR TWO HOUSES.
THIS IS TECHNICAL ISSUE. I SOLICIT OTHERS VIEWS ALSO.
R.V.RAO

Ravi Kiran

Ravi Kiran (Querist)
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27 May 2008 Dear SIR,

First of all thanks for the reply

Which Documents the Company should ask from employee so that the Company should not held liable.

Regards

Ravikiran Konda

CA. Yayati Tyagi

CA. Yayati Tyagi (Expert)
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28 May 2008 u need a certificate from bank stating amount of interest and principal repaid during the year.