Home Loan
This query is : Resolved
02 March 2010
If a property ( home) is to be purchase & registered in name of A and Person X & Y (other family member) wanted to taken a home loan-jointly for purchase of said property
As per Income tax provision is it allowable to claim interest on home loan & deduction on repayment of principal amount by X & Y?
if not what could be other possible options for claiming intt. & principal repayment benefit, as A is non-earning & X & Y both earning person?
Thanks
As per Income tax provision is it allowable to claim interest on home loan & deduction on repayment of principal amount by X & Y?
if not what could be other possible options for claiming intt. & principal repayment benefit, as A is non-earning & X & Y both earning person?
Thanks
03 March 2010
if they want to purchase , they are entitle.
if they want to purchase , they are entitle.
28 July 2024
When a property is purchased and registered in the name of one person (let's say A), but the home loan is taken jointly by other family members (X and Y) for the purpose of buying that property, the income tax provisions allow for certain claims on the home loan. Here's a detailed explanation of how to handle the situation:
### **1. **Eligibility for Claiming Deductions**
**Interest on Home Loan (Section 24(b)):**
- **Primary Claimant:** The deduction for interest on home loan under Section 24(b) can be claimed by the person who has taken the loan and whose name is mentioned in the loan documents.
- **Property Owner:** Even if the property is registered in the name of A, the interest deduction can be claimed by X and Y (the borrowers) as long as the property is used for their benefit and is not let out.
**Principal Repayment (Section 80C):**
- **Claim by Borrowers:** The principal repayment deduction under Section 80C is available to the person who is repaying the loan. Therefore, X and Y can claim this deduction even if the property is in A's name, provided the repayments are made by X and Y.
- **Joint Ownership:** If the property is jointly owned, then the principal repayment can be claimed proportionately based on the share of ownership.
### **2. **Conditions and Documentation**
**Ownership and Usage:**
- **Residential Use:** The property should be used for residential purposes by the loan holders (X and Y) to claim deductions.
- **Proper Documentation:** Ensure that the home loan agreement clearly mentions X and Y as borrowers and that they are making the repayments. This will be crucial in claiming the tax benefits.
**Claim Limitations:**
- **Interest Deduction Limit:** Each borrower can claim up to ₹2,00,000 per annum on the interest paid on the home loan under Section 24(b), provided the property is self-occupied.
- **Principal Repayment Limit:** Each borrower can claim up to ₹1,50,000 per annum under Section 80C for principal repayment, subject to the overall Section 80C limit of ₹1,50,000.
### **3. **Alternative Options and Suggestions**
If A (the property owner) is not earning and thus cannot claim the deductions, but X and Y are both earning, X and Y can still claim the benefits under the following conditions:
1. **Proper Loan Agreement:** Ensure that X and Y are co-borrowers on the home loan and that the loan documents reflect their names as responsible for repayment.
2. **Payment Records:** Maintain clear records of payments made by X and Y towards the loan to substantiate their claim for deductions.
3. **Income Tax Return Filing:** When filing their income tax returns, X and Y should claim the deductions for interest and principal repayment under their own returns, even though the property is in A's name.
### **Summary**
- **Interest and Principal Deduction:** X and Y can claim deductions for both interest and principal repayment on a home loan even if the property is registered in A’s name, as long as the loan is in X and Y’s names, and they are making the repayments.
- **Usage of Property:** Ensure that the property is used for residential purposes, and proper documentation and payment records are maintained.
If there are any specific issues or complex scenarios, it might be helpful to consult with a tax advisor or chartered accountant for personalized advice and assistance.
### **1. **Eligibility for Claiming Deductions**
**Interest on Home Loan (Section 24(b)):**
- **Primary Claimant:** The deduction for interest on home loan under Section 24(b) can be claimed by the person who has taken the loan and whose name is mentioned in the loan documents.
- **Property Owner:** Even if the property is registered in the name of A, the interest deduction can be claimed by X and Y (the borrowers) as long as the property is used for their benefit and is not let out.
**Principal Repayment (Section 80C):**
- **Claim by Borrowers:** The principal repayment deduction under Section 80C is available to the person who is repaying the loan. Therefore, X and Y can claim this deduction even if the property is in A's name, provided the repayments are made by X and Y.
- **Joint Ownership:** If the property is jointly owned, then the principal repayment can be claimed proportionately based on the share of ownership.
### **2. **Conditions and Documentation**
**Ownership and Usage:**
- **Residential Use:** The property should be used for residential purposes by the loan holders (X and Y) to claim deductions.
- **Proper Documentation:** Ensure that the home loan agreement clearly mentions X and Y as borrowers and that they are making the repayments. This will be crucial in claiming the tax benefits.
**Claim Limitations:**
- **Interest Deduction Limit:** Each borrower can claim up to ₹2,00,000 per annum on the interest paid on the home loan under Section 24(b), provided the property is self-occupied.
- **Principal Repayment Limit:** Each borrower can claim up to ₹1,50,000 per annum under Section 80C for principal repayment, subject to the overall Section 80C limit of ₹1,50,000.
### **3. **Alternative Options and Suggestions**
If A (the property owner) is not earning and thus cannot claim the deductions, but X and Y are both earning, X and Y can still claim the benefits under the following conditions:
1. **Proper Loan Agreement:** Ensure that X and Y are co-borrowers on the home loan and that the loan documents reflect their names as responsible for repayment.
2. **Payment Records:** Maintain clear records of payments made by X and Y towards the loan to substantiate their claim for deductions.
3. **Income Tax Return Filing:** When filing their income tax returns, X and Y should claim the deductions for interest and principal repayment under their own returns, even though the property is in A's name.
### **Summary**
- **Interest and Principal Deduction:** X and Y can claim deductions for both interest and principal repayment on a home loan even if the property is registered in A’s name, as long as the loan is in X and Y’s names, and they are making the repayments.
- **Usage of Property:** Ensure that the property is used for residential purposes, and proper documentation and payment records are maintained.
If there are any specific issues or complex scenarios, it might be helpful to consult with a tax advisor or chartered accountant for personalized advice and assistance.
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