Home loan is a blessing in disguise as it will help us achieve our desire of owning a home and help us save tax along with it. The maximum tax benefit for repayment of principle which can be availed under 80C is Rs 1.5 lakh. The tax exemption on the interest paid on home loans is now capped at Rs 2 lakh.

Do you know that there is the higher advantage of owning multiple homes and availing loan for the same? Yes, individuals can claim a tax deduction for interest component part in case of the second home also.

Here are some home loan Exemption from the Income Tax to the borrowers;

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First time home loan borrowers In the Union Budget 2016, a new section 80E was introduced to benefit first time home loan borrowers. The government proposed an additional deduction of Rs 50,000 on interest payment of home loan EMI.

Note that this benefit is over and above the earlier limit which was 1.5 (principle)+ 2 lakh (interest) =3.5 lakh.

First-time borrowers can avail additional Rs 50,000 on the interest component. So, total and maximum tax benefits one can avail is Rs 4 lakh per year.

Conditions for first-time buyers

Individuals who are applying for the first time should note that they should not own another house owned by him.

Individuals will be eligible only if the loan availed is less that Rs 35 lacs and the property value are less than Rs 50 lakhs.

While, the loan should have to be approved between 1st April 2016 and 31st March 2017.

Claiming tax benefit under 80C

Home loan borrowers should know that the principle deduction includes all other deductions such as PPF, NSC etc., under section 80C which is capped at Rs 1.5 lakh.

Say, for example, if an individual is claiming the benefit of Rs 1 lakh for repayment of the loan then he will be left with Rs 50,000 to claim for exemptions on PPF, NSC etc., altogether.

Tax benefits for co-borrower

Individuals who are a co-owner and co-borrower of the house can also claim for tax benefits. Note that if you are a co-applicant to the loan, but, the house is not in joint name, you cannot claim tax benefit.

If a home loan borrower is paying the principal amount of Rs 4 lakh, he can avail tax benefit only up to Rs 1.5 lakh under Sec 80C.

In the case of a joint home loan, co-borrower can also claim for Rs 1.5 lakh under sec 80C, together they can get Rs 3 lakhs. So it is always a better idea to jointly go for a home loan and ownership of the house.

HRA

HRA can be claimed if you are living in a rented home despite having your own house, you can avail the HRA benefit along with section 80C and section 24.

Tax benefits under the section can be claimed only when an individual is receiving house rent allowance as a part of his salary.

Individuals who have borrowed the amount from friends and relatives for home loan purpose can avail tax benefits. Note that, individuals will not be eligible for tax benefit on the principal amount, it is only applicable for interest component.

On January 04, 2017 by www.taxexcel.net

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Home loan is a blessing in disguise as it will help us achieve our desire of owning a home and help us save tax along with it. The maximum tax benefit for repayment of principle which can be availed under 80C is Rs 1.5 lakh. The tax exemption on the interest paid on home loans is now capped at Rs 2 lakh. Do you know that there is the higher advantage of owning multiple homes and availing loan for the same? Yes, individuals can claim a tax deduction for interest component part in case of the second home also.

Here are some must-know facts for home loan borrowers;

First time home loan borrowers In the Union Budget 2016, a new section 80E was introduced to benefit first time home loan borrowers. The government proposed an additional deduction of Rs 50,000 on interest payment of home loan EMI. Note that this benefit is over and above the earlier limit which was 1.5 (principle)+ 2 lakh (interest) =3.5 lakh. First-time borrowers can avail additional Rs 50,000 on the interest component. So, total and maximum tax benefits one can avail is Rs 4 lakh per year.

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Conditions for first-time buyers Individuals who are applying for the first time should note that they should not own another house owned by him. Individuals will be eligible only if the loan availed is less that Rs 35 lacs and the  property value are less than Rs 50 lakhs. While, the loan should have to be approved between 1st April 2016 and 31st March 2017.

Claiming tax benefit under 80C Home loan borrowers should know that the principle deduction includes all other deductions such as PPF, NSC etc., under section 80C which is capped at Rs 1.5 lakh. Say, for example, if an individual is claiming the benefit of Rs 1 lakh for repayment of the loan then he will be left with Rs 50,000 to claim for exemptions on PPF, NSC etc., altogether.

Tax benefits for co-borrower An individuals who is a co-owner and co-borrower of the house can also claim for tax benefits. Note that if you are a co-applicant to the loan, but, the house is not in joint name, you cannot claim tax benefit. If a home loan borrower is paying the principal amount of Rs 4 lakh, he can avail tax benefit only up to Rs 1.5 lakh under Sec 80C. In the case of a joint home loan, co-borrower can also claim for Rs 1.5 lakh under sec 80C, together they can get Rs 3 lakhs. So it is always a better idea to jointly go for a home loan and ownership of the house.

Download Automated Master of Form 16 Part B which can prepare at a time 100 employees Form 16 Part B for F.Y.2016-17 for F.Y.2016-17

Construction period of the property Individuals is not eligible to avail tax benefits on principal payment during the construction of the property. Only once the property is constructed and when you are in possession of the property you can avail tax benefit for the same. One is eligible to claim interest payment on preconstruction period once you are in possession of the property. This deduction benefit will be allowed for over 5 years starting from the year of possession.

HRA HRA can be claimed if you are living in a rented home despite having your own house, you can avail the HRA benefit along with section 80C and section 24. Tax benefits under the section can be claimed only when an individual is receiving house rent allowance as a part of his salary. Individuals who have borrowed the amount from friends and relatives for home loan purpose can avail tax benefits. Note that, individuals will not be eligible for tax benefit on the principal amount, it is only applicable for interest component.

Other tax benefits Along with principal and interest component, other expenses such as stamp duty, registration fee expenses can be claimed for tax benefits under Sec 80C. Also, processing fees charged for availing home loan can also be claimed for tax benefit.

On November 14, 2016 by www.taxexcel.net

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TAX BENEFIT ON HOME LOAN (INTEREST AMOUNT)UNER SECTION 24

Tax Benefit on Home Loan for payment of Interest on Home Loan can be claimed as Deduction underSection 24 as well as under the newly inserted section 80EE (Inserted in the Budget 2013, to be applicable from 1^st April 2013)

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Section 24: Income Tax Benefit on Interest on Home Loan

Tax Benefit on Home Loan for payment of Interest is allowed as a deduction under Section 24 of the Income Tax Act. As per Section 24, the Income from House Property shall be reduced by the amount of Interest paid on Home Loan where the loan has been taken for the purpose of Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property.

The maximum tax deduction allowed under Section 24 of a self-occupied property is subject to a maximum limit of Rs. 2 Lakhs (increased in Budget 2014 from 1.5 Lakhs to Rs. 2 Lakhs).

In case the property for which the Home Loan has been taken is not self-occupied, no maximum limit has been prescribed in this case and the taxpayer can take the tax deduction of the whole interest amount under Section 24.

Note: In case a property has not been self-occupied by the owner by reason of the fact owing to his employment, business or profession carried on at any other place, he has to reside at that other place not belonging to him, then the amount of tax deduction allowed under Section 24 shall be Rs. 2 Lakhs only.

It is also important to note that this tax deduction of Interest on Home Loan under Section 24 is deductible on the payable basis, i.e. on the accrual basis. Hence, the deduction under Section 24 should be claimed on the yearly basis even if no payment has been made during the year as compared to Section 80C which allows for deduction only on payment basis.

Moreover, if the property is not acquired/constructed completed within 3 years from the end of financial year in which the loan was taken, the interest benefit, in this case, would be reduced from 2 Lakhs to Rs 30 thousand only. This limit of 3 years has been increased to 5 years from Financial Year 2016-17 and onwards.

Quantum of Deduction allowed for Payment of Interest on Home Loan under Section 24
Type of Property	Self Occupied Property		Not Self Occupied Property
Completion Status	Completed within 3 years	Not completed within 3 years	Completed within 3 years	Not completed within 3 years
Deduction Allowed	Rs. 1,50,000	Rs. 30,000	No Limit	No Limit

The Quantum of Deduction allowed for payment of Interest on Home Loan under Section 24 has been summarized below:-

INCOME TAX TREATMENT OF PRE-CONSTRUCTION INTEREST

In many cases, the amount is paid for the purchase of property even before the construction is completed. Some home buyers, purchase properties on loan before the completion of construction and start paying EMI to the Bank.

In such cases, Section 24 very specifically states that Tax Deduction for payment of Interest shall not be allowed before the construction is complete. In such cases,

1.                 If Loan is taken for purpose of Repair/ Renewal/ Reconstruction: No Tax Deduction allowed for Interest paid before Completion

2.                 If Loan is taken for the purpose of Purchase/ Construction: The Interest that has been paid before the completion of construction should be aggregated and the whole aggregated amount shall be allowed as the tax deduction in 5 equal installments for 5 successive Financial Years starting from the year in which the construction has been completed.

For the purpose of simplicity and easy understanding, a comparison of Tax Benefit on Home Loan under Section 24 and Section 80C has been made here under:-

Particulars	Section 24	Section 80C
Tax Deduction allowed for	Interest	Principal
Basis of Tax Deduction	Accrual basis	Paid basis
Quantum of Tax Deduction allowed	Self Occupied Property:Rs. 2,00,000Non Self Occupied Property: No Limit	Rs. 1,50,000
Purpose of Loan	Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property.	Purchase / Construction of a new House Property
Eligibility for claiming Tax deduction	Purchase/ Construction should be completed within 3 years	Nil
Restriction on Sale of Property	Nil	Tax Deduction claimed would be reversed if Property sold within 5 years

On July 31, 2016 by www.taxexcel.net

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Computation  of  Income  under the head  income or loss from house property  – Income Tax Department instructions on calculation of annual rental value for the income tax deduction in respect of interest payable on housing loan 

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While taking into account the loss from House Property, the DDO shall ensure that 

the employee  files  the declaration referred to above and encloses therewith  a computation of such loss from house property. Following details shall be obtained and kept by the employer in respect of loss claimed under the head “ Income from house property” separately for each house property:

a)        Gross annual rent/value

b)        Municipal Taxes paid, if any

c)        Deduction claimed for interest paid, if any

d)        Other deductions claimed

e)        Address of the property

f)         Amount of loan, if any; and

g)        Name and address of the lender (loan provider)

Conditions  for  Claim  of  Deduction  of  Interest  on  Borrowed  Capital  for Computation of Income From House Property [Section 24(b)]:

Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-

      the deduction is allowed only in case of  house property which is owned and is in the occupation of the employee  for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.

(a) The acquisition  or construction of the house should be completed within 3 years from the end of the FY in which the capital was borrowed. Hence, it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.

(b) Further any prior period interest for the FYs up to the FY in which the property was acquired or constructed (as reduced by any part of interest allowed as deduction under any other section of the Act) shall be deducted in equal installments for the FY in question and subsequent four FYs.

On January 19, 2016 by www.taxexcel.net

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