It excemption on housing loan

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2013 Dear Sir,
We (me & my wife) took housing loan jointly for purchase of flat in Bangalore in the year 2009, however only my wife is claiming IT exemption for the flat till now. Again in the year 2012 we took a loan jointly for construction of house on vacant plot (plot is in my wife name)

My Query is now construction is complete and I have given the newly constructed house for rent from Aug 2013, Can I consider newly constructed house as my first housing loan since I have not calimed any IT exception for the first flat. Or do I need to show loan for the newly constructed house as my second housing loan and claim IT exemption accordingly?

@VaibhavJ

@VaibhavJ (Expert)
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22 October 2013 HI

Yes, you can but you have to ensure all payment is made from your bank a/c to avoid disputes.

Thanks//VaibhavJ

Querist : Anonymous

Querist : Anonymous (Querist)

12 November 2013 reply not clear please elobrate

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Querist : Anonymous

Querist : Anonymous (Querist)

12 November 2013 Reply is not clear, please elobarate

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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02 August 2024 When dealing with housing loans and tax exemptions, it's essential to understand how the Income Tax Act handles such claims. Given your situation, here’s how you can approach the tax exemptions for your housing loans:

### Understanding Your Situation

1. **Current Scenario**:
- **Flat in Bangalore (Loan taken in 2009)**: Your wife has been claiming tax benefits on this flat, which suggests that this flat is either self-occupied by your wife or let out and claimed under her name.
- **Newly Constructed House (Loan taken in 2012)**: The construction is complete, and the house has been let out since August 2013.

### Tax Benefits on Housing Loans

1. **Flat in Bangalore**:
- Since your wife has been claiming the tax benefits on this flat, the associated housing loan interest and principal repayments are accounted for under her name.

2. **Newly Constructed House**:
- Since this property is now let out, you can claim tax benefits related to the housing loan on this property.

### Tax Treatment for the Newly Constructed House

1. **Classification of Loans**:
- **First Property vs. Second Property**: The tax exemption treatment largely depends on the classification of the properties. Here’s how it works:

- **Self-Occupied Property**: You can claim up to ₹2 lakh per annum on interest paid under Section 24(b) and up to ₹1.5 lakh per annum on principal repayment under Section 80C. This is available for only one self-occupied property per person.

- **Let-Out Property**: The entire interest on the housing loan can be claimed as a deduction against rental income from the property. There is no upper limit for the interest deduction on let-out property, but the loss can be set off only against income from house property and carried forward to future years if it exceeds the income.

2. **Claiming Exemptions**:
- Since you have not claimed exemptions for the flat in Bangalore and you are now claiming tax benefits for the newly constructed house, you should consider the following:
- **For the Flat in Bangalore**: The flat is already accounted for under your wife’s claim. If it is claimed as self-occupied, you cannot claim it again.
- **For the Newly Constructed House**: You can claim the full interest on the housing loan against rental income as it is a let-out property. You should also claim the principal repayment under Section 80C, subject to the ₹1.5 lakh limit.

### Practical Steps

1. **Ensure Proper Documentation**:
- Maintain clear records of both loans, including the principal and interest components, and ensure you have documentation to support the claims.

2. **File Correctly**:
- In your income tax return, ensure the newly constructed house is correctly identified as a let-out property, and claim the interest on the housing loan against rental income.

3. **Review Loan Status**:
- Since you are claiming the tax benefits for the newly constructed house, make sure it is categorized correctly (as let-out) in your income tax return.

4. **Consult a Tax Professional**:
- Given the complexity of tax laws and personal circumstances, it’s advisable to consult a tax professional. They can help ensure you’re maximizing your benefits and complying with all regulations correctly.

**In summary**: You should claim the interest on the loan for the newly constructed house as it is a let-out property and consider it for the tax benefits accordingly. The first flat’s loan exemptions claimed by your wife do not affect your ability to claim deductions for the newly constructed house.