itr form for claiming home loan interest deduction
This query is : Resolved
17 May 2016
itr form for claiming home loan interest deduction
17 May 2016
Please mention your income source
Regards
CA MITHIL MUNOT
camithilmunot@gmail.com
Regards
CA MITHIL MUNOT
camithilmunot@gmail.com
17 May 2016
person is having income from taxi business, he has constructed home and taken a home loan, loan is taken in April 2015, what deduction he can take, and which form will be used.
17 May 2016
1) Home loan interest is to taken under income from House Property head.
2) Principal Payment is deductible under section 80c
For further information contact at camithilmunot@gmail.com
2) Principal Payment is deductible under section 80c
For further information contact at camithilmunot@gmail.com
17 May 2016
will income from house property be taken in negative because of interest amount. and which itr form to be used.
02 August 2024
To address your query on claiming home loan interest deduction and filing the appropriate ITR form, follow these guidelines:
### 1. **Home Loan Interest Deduction**
**Income Tax Act Provisions:**
- **Interest on Home Loan:** Under Section 24(b), an individual can claim a deduction for interest paid on a home loan for the purchase/construction of a house. The maximum allowable deduction is ₹2,00,000 per year for a self-occupied property. If the property is rented out, the entire interest paid can be claimed as a deduction.
- **Principal Repayment:** Under Section 80C, you can claim a deduction for the repayment of the principal portion of the home loan up to ₹1,50,000 per year. This deduction is part of the overall ₹1,50,000 limit under Section 80C, which includes other investments like PPF, ELSS, etc.
### 2. **Income from House Property**
If the house is self-occupied, you can claim:
- **Interest Deduction:** Up to ₹2,00,000 per annum.
- **Principal Repayment:** Up to ₹1,50,000 under Section 80C.
If the property is rented out:
- **Interest Deduction:** You can claim the entire amount of interest paid on the home loan under Section 24(b). There’s no cap for rented properties.
- **Income from House Property:** You need to declare the rental income (if applicable) and claim the interest deduction to reduce taxable income from house property.
### 3. **ITR Form to be Used**
- **ITR-3**: This form is used if you have income from a business (taxi business) and also want to claim deductions for home loan interest. Since you are a business owner and also want to claim deductions related to house property, ITR-3 is appropriate.
**Filling ITR-3:**
- **Income from Taxi Business**: Report this income in the 'Income from Business or Profession' section.
- **Income from House Property**:
- Enter details in the 'Income from House Property' section.
- If the property is self-occupied, you can show a negative income (i.e., income from house property can be shown as a loss) due to the interest deduction.
- If the property is rented out, include the rental income and then claim the full deduction on interest.
### Example:
If your client has:
- **Home Loan Interest Paid**: ₹2,00,000
- **Principal Repayment**: ₹1,00,000
- **Rental Income**: ₹1,50,000 (if the property is rented)
In ITR-3:
- Report the rental income under the 'Income from House Property' section.
- Claim ₹2,00,000 as a deduction for interest under Section 24(b).
- Claim principal repayment (up to ₹1,50,000) under Section 80C in the 'Deductions' section.
If the home is self-occupied and no rental income is being received, the interest deduction will reduce the taxable income from house property to zero and might show a negative value if interest exceeds ₹2,00,000.
### Summary
1. **For claiming home loan interest deduction**, use ITR-3.
2. **Income from House Property**: Deduct interest from house property income. Show rental income or negative value (if self-occupied).
3. **Claim Deductions**: Claim interest under Section 24(b) and principal repayment under Section 80C.
Always ensure you are up-to-date with the latest tax rules or consult with a tax professional for any specific advice tailored to your circumstances.
### 1. **Home Loan Interest Deduction**
**Income Tax Act Provisions:**
- **Interest on Home Loan:** Under Section 24(b), an individual can claim a deduction for interest paid on a home loan for the purchase/construction of a house. The maximum allowable deduction is ₹2,00,000 per year for a self-occupied property. If the property is rented out, the entire interest paid can be claimed as a deduction.
- **Principal Repayment:** Under Section 80C, you can claim a deduction for the repayment of the principal portion of the home loan up to ₹1,50,000 per year. This deduction is part of the overall ₹1,50,000 limit under Section 80C, which includes other investments like PPF, ELSS, etc.
### 2. **Income from House Property**
If the house is self-occupied, you can claim:
- **Interest Deduction:** Up to ₹2,00,000 per annum.
- **Principal Repayment:** Up to ₹1,50,000 under Section 80C.
If the property is rented out:
- **Interest Deduction:** You can claim the entire amount of interest paid on the home loan under Section 24(b). There’s no cap for rented properties.
- **Income from House Property:** You need to declare the rental income (if applicable) and claim the interest deduction to reduce taxable income from house property.
### 3. **ITR Form to be Used**
- **ITR-3**: This form is used if you have income from a business (taxi business) and also want to claim deductions for home loan interest. Since you are a business owner and also want to claim deductions related to house property, ITR-3 is appropriate.
**Filling ITR-3:**
- **Income from Taxi Business**: Report this income in the 'Income from Business or Profession' section.
- **Income from House Property**:
- Enter details in the 'Income from House Property' section.
- If the property is self-occupied, you can show a negative income (i.e., income from house property can be shown as a loss) due to the interest deduction.
- If the property is rented out, include the rental income and then claim the full deduction on interest.
### Example:
If your client has:
- **Home Loan Interest Paid**: ₹2,00,000
- **Principal Repayment**: ₹1,00,000
- **Rental Income**: ₹1,50,000 (if the property is rented)
In ITR-3:
- Report the rental income under the 'Income from House Property' section.
- Claim ₹2,00,000 as a deduction for interest under Section 24(b).
- Claim principal repayment (up to ₹1,50,000) under Section 80C in the 'Deductions' section.
If the home is self-occupied and no rental income is being received, the interest deduction will reduce the taxable income from house property to zero and might show a negative value if interest exceeds ₹2,00,000.
### Summary
1. **For claiming home loan interest deduction**, use ITR-3.
2. **Income from House Property**: Deduct interest from house property income. Show rental income or negative value (if self-occupied).
3. **Claim Deductions**: Claim interest under Section 24(b) and principal repayment under Section 80C.
Always ensure you are up-to-date with the latest tax rules or consult with a tax professional for any specific advice tailored to your circumstances.
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