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Housing loan deduction and its accounting treatment

Sandeep (Proprietor) (228 Points)

22 November 2011

Hi..............

I have one query regarding Housing Loan and deduction u/s 80 C and
Interest of Housing loan repayment under the head of House Property
with self occupied House,

Matter,

My client has taken a housing loan form Bank for Rs. 20 Lacs, in the
name of his wife and himself as a co-applicant. Sale Deed has made in
the name of his wife only due to the benefit of Registration fee. Now
whether deduction u/s 80 C will be available to husband on the basis
of co-applicant and Interest deduction under House Property Head.

What is Accounting Treatment in the Books of Husband - Whether he
mention half portion of loan in the liabilities side. than Assets side
what is mention. Also suggests me about subsidies procedure for
housing loan.

Kindly clear above mention queries as early as possible.

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5 Replies

RAJ KUMAR (FINANCE MANAGER) (1393 Points)
Replied 22 November 2011

IF THE MONEY IS OF HUSBAND THEN EVN WIFE IS THE REGISTERED OWNER IT DOES NOT MATTERS.

FOR THE PURPOSE OF HOUSING LOAN DEDUCTION IF WIFE IS NOT A SEPERATE ASSESSEE. THEN HUSBAND CAN CLAIM THE FULL DEDUCTION FOR INCOME TAX PURPOSE.

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Z (Tax Consultation (US and India)) (2965 Points)
Replied 22 November 2011

Please reffer to well explained article by CA. Naveen Jain

/forum/analysis-of-housing-loan-sec-80c-and-24b--136402.asp

Vipan Kumar (Chief Accounts officer) (55 Points)
Replied 22 November 2011

Sir,

Please specify whether an assessee can claim deductions for both i.e. House rent allowance & Housing Loan, when he is residing outstation due to his job placed at that station & paying hra ?

Vipan Kumar (Chief Accounts officer) (55 Points)
Replied 22 November 2011

Sir,

Whether a son can claim housing loan repayment deduction, when loan is sanctioned on the name of father & son is the co-borrower? Property is registered on the name of father.

Z (Tax Consultation (US and India)) (2965 Points)
Replied 22 November 2011

According to the provisions of sec 10(13A)

If an assesse is NOT LIVING in his OWN house or if he is INCURRING expenses of RENT in the house in which he is staying then exemption of the amount to the extent calculated by the criteria specified is allowed.

Assesse is staying outside by the reason of job and further if he is paying rent.

Then YES , he can claim deduction of both HRA (to the extent calculated in accordance to the provision) and housing loan (both interest paid (to the extent of 150,000 or 30,000 depending upon the fact of the case) and loan paid back u/s 80c)

Further considering the fact that the loan is of 20,00,000 , am assuming that interest payable is more than 150,000 (annually) and further assuming that GAV of house is more than interest.

If such property is let out then WHOLE OF THE INTEREST is allowed as deduction.

If assumption does not hold good. According to the provisions of sec 23

If the house property can not be occupied by the reason of the fact that owing to the employment, business or profession of the employee carried on at any other place and he has too reside at that any other place in a building NOT BELONGING TO HIM

Annual value of such property shall be deemed to be NIL (Interest deduction will be allowed to the extent specified above)

PROVIDED

Any other benefit has not be derived by the OWNER from such property or house or PART OF HOUSE is ACTUALLY NOT LET OUT.

Since property is not registered in the name of the son , therefore I think he can not avail deduction for repayment of loan u/s 80c.