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Interest on Housing Loan

MANOJ (Articled Assisstant) (32 Points)

01 May 2010

Hello Everbody,

my case is such that I have aquired a property 4 years back by taking a loan from my relative and i have not yet repaid the loan, now i have taken a housing loan from bank on this property and have use that money to repay the earlier loan taken from the relative, I am confused whether I can claim interest paid to the bank on housing loan in income from house property

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10 Replies

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 01 May 2010

A. Loan asked from a relative is not deductible. Interest on such loan, if any, is also not deductible.

B. Loan taken to repay "such loan" can't be considered as home loan.

C. Loan taken to repay any other loan, cannot be considered as loan taken for the primary purpose.

D. Interest in ur case too is not deductible

vikash rathi (Chartered Accountant) (787 Points)
Replied 01 May 2010

agree with dhiraj sir.......

CA KISHORE VANAMA (Profession) (479 Points)
Replied 01 May 2010

Hai dhiraj can u tell me the section or case laws regarding loan taken from relative and interest on such is not deductible

CA Kushal Rawal (C A ) (42 Points)
Replied 02 May 2010

Helo Dhiraj Sir,

I am not areed with u becos the sec 24(b) of the Act says that from when ever u take the loan

for the purpose of aquisition, for construction, repais of house etc. & paid the interest thereon is allowed as deduction.

And the 2nd issued is that interest paid on for taking the loan to repaid the previouse loan is also deductableu/s 24 (b) .

varun gupta (Senior Accounts Officer) (89 Points)
Replied 02 May 2010

Kaushal Rawal is absolutely correct and Dhiraj is totally wrong.

1) Housing loan interest paid to relative will be allowed as deduction us 24b.

2) If Loan taken to repay original loan then interest on new loan will be allowed as deduction.

Nothing in act specify that u must take hp loan from financial institution only for claiming deduction us 24b.

rahul (student) (151 Points)
Replied 02 May 2010

agree with kushal

u can claim the deduction u/s 24 (B)

SRINIVAS SRIRAJ (Chartered Accountant) (130 Points)
Replied 02 May 2010

I agree that the int on loan from relative is deductible. Also, you can take a loan to repay an earlier loan and continue to get the deduction for int on the new loan. Only, one point I would like to add.

Compound Int or penal int are not deductible. If you have used the new loan to repay the Interest or Penal Int, the int on that portion of the loan utilised for the said purpose is not deductible.

SACHIN KUMAR GARG (Final Student) (105 Points)
Replied 03 May 2010

I m agree with Dhiraj

Housing Loan can be provided only by Housing finance institution or bank who are eligible to provide this loan. And no one can morgaged the property without holding the licence of loan agaist property from Central Govt. and also only financial institute can provide the interest certificate.

CA Lovenish Bansal (JOB) (343 Points)
Replied 03 May 2010

Originally posted by : varun gupta
	Kaushal Rawal is absolutely correct and Dhiraj is totally wrong. 1) Housing loan interest paid to relative will be allowed as deduction us 24b. 2) If Loan taken to repay original loan then interest on new loan will be allowed as deduction. Nothing in act specify that u must take hp loan from financial institution only for claiming deduction us 24b.