Interst on housing loan

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This query is : Resolved

VIKKI SINGHVI (Querist)

12 January 2013 One of my assessee has taken housing loan in two names but whole installment is being paid by only one person. So whether the other person can get deduction of interest on housing loan & repayment though he is not paying? What will be the accounting treatment?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

12 January 2013 What accounting treatment has been provided to the House in the accounts of the respective "two names" will lead us to frame a suitable reply.

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However, the person who is making payment can certainly claim Deduction U/s 80C as well as interest liability of his part.
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VIKKI SINGHVI

VIKKI SINGHVI (Querist)

13 January 2013 The house is shown in both person's accounts in 50% share.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

13 January 2013 When the House has been shown as 50-50, Liability towards Home Loan may also have been shown 50-50.
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A mutual understanding between the co-owners
seems to be like that- installments will be paid by the first co-owner and in turn the Second Co-owner will compensate him towards the repayment made on his behalf.
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The first owner has to debit the Second Co-owner in respect of the half the amount paid by him and crediting the Home Loan A/c with the equal amount.
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He will also credit half of the interest amount on home loan to the Bank and Debit to Interest on Home Loan A/c
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After such accounting treatment, if amount is repaid by the Second Party to the First
Party, to settle their accounts at a regular interval, I think, in such a situation both may claim deduction.
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