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Earned Home loan interest from relative

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Rakesh

26 Points Posted on 29 July 2022

Hello All,

I took Rs 20 lakh as home loan from my mother last year.

My mother is senior citizen age 66 years, she receives following incomes at different sources as 1) pension income of rs 24600/ yearly 2) Rental income as 150000 /- yearly 3) Dividend income of Rs 20,000 /- yearly and 4) Saving interest of Rs 9000 Yearly

I have returned 2 Lakhs Rs during current year back to my mother against my home loan repayment where 70000/- as interest amount,

Would like to know following questions :

1) Where I can mention above interest income in my mother's ITR -2 filing for current year AY 22-23

2) and how I can take benefit from home loan interest payment to my mother for current year AY 22-23

Really appreciate for quick response.

Replies (3)

Quick Summary

This discussion explores the tax implications of receiving a home loan from a relative. It clarifies that interest income received by the mother should be declared under 'Income from Other Sources' in her ITR-2. However, it highlights that the borrower cannot claim tax benefits for home loan interest paid to a relative, as these benefits are typically only applicable for loans from financial institutions.

Kiran Hathalia

837 Points Posted on 29 July 2022

The interest income should be shown under the head income from other sources. However, u have to deduct TDS @ 10% u/s 194A of the Act on interest of Rs. 70,000 i.e. 7000 and the same shall be claimed by your mom while filing her return of income. Further, the benefits of interest and principal repayment of loan is available only if the loan is taken from financial institutions. Hence, the benefit of the same shall not be allowed in your case as the loan is taken from your mother (relative).