Home loan interest tax benefit

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Vinit Bansal (Querist)
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26 October 2012 I have question regarding home loan interest. Suppose I want to buy a house worth Rs. 100. Now there are 3 co-owners of the house. The amount will be paid as Rs 40 in cash & Rs 20 per head as home loan. Co-owner A gives Rs 30 in cash and takes Rs 20 as home loan. Whereas Co-owner B&C give Rs 5 as cash and take Rs. 20 each as home loan. So share in home loan is 20:20:20. Thereby making share in the property as 50:25:25 for A:B:C. Now what will be the tax benefit for each co-owner on the interest of the EMI.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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26 October 2012 Tax benefit under section 24b & 80C also based on the ownership ratio only so it can be shared as 50:25:25

Vinit Bansal

Vinit Bansal (Querist)
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26 October 2012 So even if thr is an owner without share in loan but has share in property thn he can also avail this benefit ...

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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26 October 2012 your Income will be calculated based on the ratio of the ownership of the house property as well the deduction also will depend on the same. Home loan arrangements between the owners, it will not deviate the income or deductions. in case property will be divided and loan taken accordingly then the question will be raised based on the loan. only the condition here getting the tax benefit the co owner should be co applicant for home loan also.

Anand Modi

Anand Modi (Expert)
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27 October 2012 In my opinion it will be 20:20:20 because the primary liability to pay the loan is of the person upto his portion only and not by all the owners.
The payment of loan/ Installment to be made by the person will be exactly equal to the proportion of his loan and hence benefit of Section 80C is available to the person who has accepted the loan and pays it.

Vinit Bansal

Vinit Bansal (Querist)
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27 October 2012 Plz clear this confusion ...

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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28 October 2012 According to Section 26, Where the House property owned by Self occupied by Each of the Co owners, the annual let out value is Nil and Each Co owners entitled to deduction of Rs.30000/Rs.150000 as the case may be u/s.24b on account of Interest on borrowed capital

According to the same section, where the property owned by co owners and that is let out. the Income from such property shall be computed as if property owned by one owner and thereafter the income so computed shall be apportioned amongst each co owner as per specific share in the house property

act no where mentioned the home loan share basis