Taxation FAQs
2. Relief on second housing loan
3.Treating rebate on house rent to wife
4. Tax Exemption on a property owned by wife
5. Rebate on Stamp duty charges
6 . Capital Gains tax on a gifted property
8 . My wife is the co-owner of our flat and also the co-applicant...
9 . I own a house in a city and have taken another on rent for my parents. ...
I am residing in a flat which I had purchased after taking a housing loan and am claiming deduction in respect of the interest and principal repayments towards the loan. I have taken another housing loan for construction of a building in a different city and have let it out. Can I claim deduction in respect of the interest and principal repayment of this housing loan?
There should be no difficulty in your claiming the deduction under section 24 as also the deduction under section 80-C in respect of the interest payment and the principal repayment of the housing loan taken by you.
You may note that the principal repayment will qualify for deduction only if it is taken from a bank or certain specified institutions. You may also note that if a property is self-occupied, the deduction in respect of interest will be restricted to Rs 1, 50,000.
Section 80-C allows a deduction in respect of principal repayment but sets a limit of Rs 1 lakh in respect of certain payments and investments, which also includes the principal repayment towards housing loan.
My wife and I have taken a housing loan for a property, which is in the name of my wife. My wife is the applicant and I am a co-applicant. My wife does not have any income. The loan was sanctioned based on my salary income and I am paying the EMI. Can I claim the interest and principal repayment as deduction while computing my taxable income? Am I eligible to claim exemption on the house rent allowance if I pay rent to my wife for the property?
From your query it is not clear if this property came to be acquired by your wife. If the property was acquired only out of borrowed funds where the EMI is paid by you and the balance is out of your sources, given that you have stated that your wife has no income, it will mean that though the property stands in the name of your wife, the clubbing provisions in section 64(1) would apply and the income from the property will have to be assessed only in your hands.
You may note that income will include losses. Therefore, the loss computed under the head income from house property can be claimed by you as deduction as the income or loss from the property will be assessed in your hands.
Deduction under section 80C will be available to you as far as principal repayment is concerned.
If you pay rent to your wife to claim that as deduction, the rental income will get clubbed in your hands. This nullifies any gain you will get out of claiming deduction.
I have constructed a house after taking a bank loan and am claiming the interest paid on the housing loan as deduction. I purchased another plot along with my wife and we are constructing a house after taking a loan in both our names, me being the first applicant. The house will be ready for occupation by March 31, 2011. The EMI will be paid by me.
Am I eligible to claim the entire interest paid on the second housing loan as deduction while calculating my taxable income or can I claim the deduction only proportionately as the property is jointly owned by us and the loan is availed jointly by us? I propose to show the first house as being let out.
The claim for interest on the housing loan taken for the second property will depend on who is the owner of the property. If you are the real owner, though the property can be registered in your name and in the name of your wife, the interest paid can be claimed as a deduction only by you subject to the limits specified under section 24.
If on the other hand you are joint owners in the real sense, the claim will have to be made proportion to your ownership in the property subject to the overall limits specified under section 24.
I purchased a property in a city for self-occupation. The property was registered in and possession was taken.
The cost of the property, stamp duty and registration charges were financed through a housing loan from a Bank.
I will be claiming deduction under Section 80-C of the principal repayment and under section 24 of the interest paid during the year. Please clarify if the stamp duty and registration charges will qualify for additional deduction under section 80C.
In your case, though the stamp duty and registration charges have been paid out of borrowed funds, the amount will be allowed as a deduction. Independent of this, the principal repayment and interest paid to the bank will qualify for deduction under sections 80C and 24 respectively.
I intend to gift to my son, a flat that I have purchased about a year ago. Since there is no value to the transfer, would I be liable to Short Term Cap Gains Tax? If yes, how would it be calculated? What would the implications, if any, be for my son?
. As the relationship of son and a father is one among the 8 relationship as covered by Income Tax Act, any transfer of Capital Asset to these relatives by way of Gift does not attract any Capital Gains. This also does not have any tax liability in the hands of transferee i.e in this case -your son.
But, in case your son in turn transfer/sells the property, then this would attract Capital Gains per the provisions as defined in Income Tax Act. You may refer few links here for better understanding.
I and my father plan to jointly buy a house. My father shall be the first owner and the entire proceeds shall be discharged by him. Can I pay the stamp duty and registration fees and claim deduction under Sec 80C of the IT act? Can I pay him rent and also claim an HRA exemption?
You can claim deduction under Sec 80C on Stampduty and registration fees paid for the house. However you will not be eligible to claim HRA Exemption if the house is partly owned by you.
My wife is the co-owner of our flat and also the co-applicant for the home loan. She is a housewife and has no source of income. Can I avail of all the tax benefits since the EMI for the loans paid from my salary?
My employer says I can avail of only 50% of the tax benefit since I am a co-owner. Please advise.
You can claim the entire tax benefit on the payable interest and principal repayments for the loan. If the employer provides only partial benefit, you can claim the rest while filing your income tax return.
I own a house in a city and have taken another on rent for my parents. Can I claim HRA on account of the rent I pay? Also, can my wife pay me a rent for the house owned by me and claim HRA?
The Income Tax Act does not specifically prohibit rental payments to spouse, but it is likely that the tax department will treat such a payment as a colourable/sham transaction. Also you cannot claim HRA on the rent paid for your parentsaccommodation.
I bought an apartment in 2007, which is owned jointly with my wife. The home loan too has been taken by both of us, but the account from which the EMI is deducted is not held jointly. The interest component of the loan is more than Rs.3 lakh a year. Can both, my wife and I, claim tax benefit?
Even if you are paying the full EMI from your income and your wife is not contributing towards this, she will be eligible for deduction of interest under Section 24 as she is a joint owner of the property and also a joint applicant for the loan. This is because the deduction on interest is on -due basis', not on the basis of payment. You have not mentioned whether your wife is transferring any amount to the account from which the home loan EMIs are being deducted. Because, deduction on principal under Section 80C will not be allowed as it is on payment basis if she is not contributing to the account from which the EMI is being paid. If the house is rented out, joint owners can claim the entire amount paid as interest on the loan for deduction. For self-occupied property, the maximum amount every co-owner can claim is Rs1.5 lakh.
My father had availed a loan of Rs 4.5 lakh from a bank in 2004 with my mother as co-applicant. In 2010, my father died. The onus of repaying the loan is with my mother. She is dependent on me and I am paying the EMI of Rs 5,640 a month.
Can I claim tax benefit on this loan amount? Can't my mother ask for a waiver of the pending loan as she is a homemaker and is not earning? The rate of interest is 15 per cent. Should I approach another bank for refinancing and try for a better deal?
To claim deduction on repayment of housing loan, income from house property should be chargeable to tax in the hands of the individual and loan should be repaid by the individual as a borrower. You would not be eligible for the deduction. You would be able to claim the tax benefit on housing loan repayment if you own or co-own the property and also become borrower or co-borrower of the loan and satisfy other conditions. For loan waiver, please refer the of the agreement.
I have a housing loan of Rs 5 lakh. The house is held jointly with my wife. If I pay an instalment from HUF, can I get deduction U/s 80c? Can I show the amount paid from HUF as a loan and claim or deduction U/s 80c?
For claiming such a deduction, income from house property should be chargeable to tax in the hands of the individual as an owner and loan should be repaid by the individual as a borrower of loan.
Accordingly, as the income from such property is not chargeable to tax in the hands of the HUF and the HUF has not borrowed the loan, there will be no eligibility to claim deduction. Even if you show amount paid by HUF as a loan to you and HUF repays loan to the bank, the situation would be the same. Only when you being the borrower of loan make repayment, would you be eligible for deduction under section 80C.
My daughter and son-in-law are now NRIs. They own a flat in Coimbatore. I hold a general power of attorney in respect of the flat. I intend to rent out the flat for Rs 2 lakh annually. They have no other income. Is it compulsory to deduct tax at source from rent? Can I get exemption as there is no tax liability under Sec 195? Is there an NRI cell dealing with such cases? As my daughter and son-in-law left India in 2000 they do not have any details of their PAN numbers.
As your daughter and son-in-law are non-residents in India, the person responsible to make such rental payments to them would be required to deduct tax at source while making the payment. If the tax deducted at source exceeds tax payable, they can claim refund. However, your daughter and son-in-law can obtain a certificate for NIL or lower rate of withholding tax by following the steps prescribed under the Act. In such case, the rental payments may be received without deduction. . However, please note that PAN is a pre-requisite for obtaining such certificate.
