LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Interest on housing loan

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)

07 March 2015

Friends

If a father and son has jointly taken a housing loan who will get the benefits under IT Act 1961 ie under section 80C and 24. Is the determining factor be the person making the payment. What would be the situation if the payment is made from a joint account.

Regards,

Reply
Follow
Share

4 Replies

MAHESH (Tax Consultant) (114 Points)
Replied 11 March 2015

Dear Dipjyoti,

The answer based on property holding. if both are holding property den the appropriate claim will be proportionate percentage of property held.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 26 March 2015

Hello,

Joint holders can claim the maximum tax benefits individually. This means each holder can get a tax rebate of Rs. 1.50 lakh for principal repayment under Sec 80C and Rs. 2 lakh for interest payment under Sec 24.

The tax benefits are applied according to the proportion of the loan taken by everyone involved in the joint loan. For e.g. if the ratio of ownership is 70%:30% then the loan amount of 50 L will be split as 35 L and 15 L respectively and interest/principal applicable to the respective amounts will be taken into account for each individual taking the loan. For claiming your tax, it is best to procure a home sharing agreement, detailing the ownership proportion in a stamp paper, as legal proof for ownership.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 26 March 2015

Is the determining factor be the person making the payment?

Yes, If you are only person repaying the loan, you can claim the entire tax benefit for yourself (provided you are an owner or co-owner). You should enter into a simple agreement with the other borrowers stating that you will be repaying the entire loan. If you are paying part of the EMI, you will get tax benefits in the proportion to your share in the loan.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 26 March 2015

What would be the situation if the payment is made from a joint account?

Joint account – The repayment of a joint loan has to be made from a joint account owned by the co-applicants. Each of them needs to contribute his/her share to the account.