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Section 24b interest on home loan from spouse

Ajit (Others) (36 Points)

15 May 2017

My wife is buying an apartment for self occupation. She will take loan of 25 lakhs at 9% interest from me. Can she claim tax deduction under section 24b for the interest paid to me from her other income. I want to know whether interest on loan from spouse is allowed under section 24b.

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6 Replies

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 15 May 2017

Interest on loan from spouse is not deductible better take the loan in joint names so that if she does not claim you can claim

Ajit (Others) (36 Points)
Replied 15 May 2017

You have not understood my query. I am giving loan to my wife to buy the apartment and she is paying me interest and claiming section 24b deduction for the interest from her other income.

S.K.Jha (student) (265 Points)
Replied 15 May 2017

As Per Section 24(b),

1. Loan canbe taken from anyone i.e., even from friend or family member.

2. Loan must be taken for Purchase, Construction, Repair and Rennovation.

since your wife is taking loan for Purchase of an Apartment for Self Occupation. Self Occupied Property is governed by Section 23(2)(a).

As per Section 23(2)(a), Maximum deduction shall be allowed is Rs. 2,00,000, If following conditions are satisfied :-

Loan must be taken ON or AFTER 1/4/1999.
Loan must be taken for Purchase or Construction of the House property.
Aquisition or Construction must be completed within 5 Years from the end of Financial Year in which loan was taken.
A lender Certificate must be obtained, certifying fulfillment of following conditions.

In case of Non- fulfillment of any of the above conditions Maximum Deduction will be Rs. 30,000 instead of Rs.2,00,000 UNDER THE HEAD INCOME FROM HOUSE PROPERTY.

Conclusion:

Your wife is taking loan from you ON or AFTER 1/4/1999, loan was taken for Purchase. If your wife will acquired the property within 5 Years and You give the certificate certifying the fulfillment of above conditions.

Then Your Wife will be eligible for Deduction of Rs. 2,00,000 under the HEAD INCOME FROM HOUSE PROPERTY.

3 Like

Ajit (Others) (36 Points)
Replied 16 May 2017

Thank you Mr.Jha. Could you please inform what all should be mentioned in the certificate I have to give my wife. Do you know any link which shows a same certificate.

S.K.Jha (student) (265 Points)
Replied 16 May 2017

Make a promisory Note stating the 1.Name of the Lender 2.PAN of the Lender 3.Name of the Borrower 4.PAN of the Borrower 5.Loan Amount 6.Repayment Tenure 7.Rate of Interest