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Eligiblitu under sec 24(b)

sajjan ropiya (tranee) (60 Points)

09 May 2016

I want to take an construction loan, whereas land is in my father's name. Loan would be on my part only, & my father will be co borrower. Suggest me the way to claim deduction u/s 24(b)

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azrukhan (Student) (82 Points)
Replied 09 May 2016

#Sajjan

Interest on housing loan is allowable as deduction under Sec 24(b) on accrual basis not on paid basis, if amont is borrowed for the purpose of purchase, construction, repair, renewal , reconstruction of the house . you can claim Deduction for two or more housing loans.

Interest = service fees, brokerage, commission, prepayment charges etc.

Interest penalty on unpaid interest not allowed as deduction.

For claiming deduction under this section, assessee must be the owner or deemed owner of the house property and loan shall be in the assessee name.

Now calculation Part:

The maximum tax deduction you can take under Section 24 for a self-occupied property is subject to a maximum limit of Rs. 2 Lakhs and if the property on which loan has been taken is not self occupied no maximum limit has been prescribed (i.e you can take whole interest amount as deduction)

Interest for pre construction or acquisition period :

interest in this case allowable in 5 equal installment beginning from the year of completion of house property. ( its known as prior period interest and its not allowed if the amount used in case of repairs, renewal or reconstruction)

in case of Co-borrower

If the home loan is taken on joint names then the deduction is allowed to each co-borrower in proportion to his share in the loan. For taking such deduction it is necessary that such co-borrower must also be co-owner of that property. If the assessee is a co-owner but is repaying the full loan himself, then he can claim the deduction of full interest paid by him.
The limit of deduction in case of Self occupied property applies individually to each co-borrower . In other words, each co-borrower can claim deduction upto Rs. 2 lakh/Rs. 30,000. No limit is applicable to let out property.

Tax benefit on Home Loan (Principal Amount) under Sec 80C

The amount paid as Repayment of Principal Amount of Home Loan is allowed as tax deduction under Section 80C of the Income Tax Act. The maximum tax deduction allowed under Section 80C is Rs. 1,50,000.

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