Home loan exemption

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Sandeep Surampalli (Querist)
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16 July 2017 Hi Team,

I have a joint home loan along with my spouse. Require clarification irrespective of my wife working or not, can I claim the entire principal and interest amount under exemption if my better half is not claiming.

If I can claim than can I have the clause under which I can go ahead.

Secondly if my wife is working can we claim the amount in 70:30 ratio for both principal and interest.

Please clarify by both queries.

Thanks.
Regards,
Sandeep

Anand

Anand (Expert)
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17 July 2017 In the case of self-occupied property, deduction for interest is to be claimed under section 24(b) and this cannot exceed Rs.2,00,000 or Rs. 30,000 (as the case may be). If all the following conditions are satisfied, then the limit in respect of interest on borrowed capital will be Rs.2,00,000:
➣ Capital is borrowed on or after 1-4-1999.
➣ Capital is borrowed for the purpose of acquisition or construction (i.e., not for repair, renewal, reconstruction).
➣ Acquisition or construction is completed within 5 years from the end of the financial year in which the capital was borrowed.
➣ The person extending the loan certifies that such interest is payable in respect of the amount advanced for acquisition or construction of the house or as re-finance of the principal amount outstanding under an earlier loan taken for acquisition or construction of the property.
If any of the above condition is not satisfied, then the limit of Rs. 2,00,000 will be reduced to Rs. 30,000.
In case of a let-out property, there is no limit on the quantum of interest which can be claimed as deduction under section 24(b).
Please note that the Income Tax Department will not allow you and your wife to each claim Rs. 2,00,000/- as a deduction. The Department maintains a stand that the property can get a deduction of Rs. 2,00,000/-. This means that in case of the joint loan, both the husband and wife can claim such that total adds up to Rs. 2,00,000/-. The share in property should ideally be ascertainable.
There is a judgment of the Bombay High Court which however allows deduction of upto Rs. 2,00,000/- each
Commissioner Of Income-Tax vs P.R. Thakkar on 26 March, 1987 [1988 170 ITR 224 Bom]
https://indiankanoon.org/doc/461568/
Extract
"The court said that a reading of sections 20 to 26 of the said Act made it clear that where a house property was owned by co-owners who had definite and ascertainable shares, the gross income from such property was first to be ascertained on the basis of the provisions of section 23 of the said Act. From such gross income, the deductions under section 24 had to be made. This gave the net income from the total property as available to the co-owners. The net income was then to be allocated to each of the co-owners in the proportion of their respective shares. After this was done, each of the co-owners was entitled to the deductions under section 24. Each was entitled to the deduction of interest on the amount of money that he might have borrowed for the construction or acquisition of his share in the house property."

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