07 February 2022
I am an individual taxpayer having a house property with my name received by gift deed from mother. Now I am recently purchased an another new house property with my wife's name for which I have taken a loan(first time ever) from an approved financial institution and I am also co owner for loan purpose. Now my question is that am I able to claim the principal and loan rebate in my income tax file and also what will be impact to remove the rebate to claim RS. 150000/- for interest on loan in latest budget 2022 in my case. Kindly fully explain. Atul 8302096732
09 July 2024
Based on your scenario, here’s a detailed explanation of how the income tax implications apply to your situation:
### 1. Principal Repayment Deduction (Section 80C):
- **House Received by Gift Deed**: - Since the house property received by gift deed from your mother is in your name, you cannot claim deductions for principal repayment under Section 80C. Deductions under Section 80C are only available for principal repayment of loans taken for acquisition or construction of a property in your own name. Since this property was received as a gift, you did not incur a loan specifically for its acquisition or construction.
- **New House Property with Loan (Co-owned with Wife)**: - For the new house property purchased jointly with your wife and financed through a loan, you can claim deductions under Section 80C for the principal repayment of the home loan. This deduction is capped at Rs. 1.5 lakh per financial year, including other eligible investments such as PPF, EPF, LIC premiums, etc.
### 2. Interest on Home Loan (Section 24):
- **Interest on Loan for New House Property**: - You can claim deductions under Section 24 for interest paid on the home loan for the new house property. For self-occupied properties, this deduction is limited to Rs. 2 lakh per financial year. If the property is let out or deemed to be let out, there is no upper limit on the interest deduction.
### Impact of Budget 2022 Changes:
- **Removal of Rebate for Interest on Home Loan**: - In Budget 2022, the government removed the rebate available under Section 24(b) for interest paid on home loans for self-occupied properties up to Rs. 1.5 lakh. This means that now the maximum deduction available for interest on a self-occupied property is limited to Rs. 2 lakh under Section 24(b). - This change does not affect your ability to claim interest deductions on the home loan for the new property. You can still claim up to Rs. 2 lakh per financial year under Section 24(b), assuming the property is self-occupied.
### Summary:
- **House Received by Gift Deed**: No deduction for principal repayment (Section 80C) since it was received as a gift. - **New House Property with Loan**: You can claim: - Deduction for principal repayment (up to Rs. 1.5 lakh annually, Section 80C). - Deduction for interest on home loan (up to Rs. 2 lakh annually, Section 24(b)).
Ensure to maintain proper documentation including loan statements, payment receipts, and completion certificates (if applicable) to substantiate your claims during tax assessment. If you have any doubts or specific questions, consulting with a tax advisor would be beneficial to maximize your tax benefits within the legal framework.
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