Interrest Piad By Husband On House Property Owned By Wife

Same Problem

Hi Satya,

If Wife & Husband are the co-owners of the House property, then Husband can claim the IT benefits over the principal & interest paid by him. In this case, tax benefits will be available in the ratio of their holdings.

But If it is not the case, i.e. Wife is the only owner the Asset, then Husband can't claim the IT benefits.

Thanks,

KK

Hi Satya & Ashish,

I found another similiar Query on browsing. Have a look @ it. It's a food for thought.

Q. Will I get deduction for home loan repayments made by me on a flat owned by my wife?

I am a resident of Delhi. I intend to purchase a residential property in Delhi for my own occupation and will be taking a home loan to pay for 80% of the property value. The balance 20% will be paid from my savings. My wife is a housewife with no income of her own. I intend to register the house in her sole name to take advantage of the concessional rate of stamp duty on properties registered in favour of women. I will gift her the money required to make the 20% down payment as well as the monthly amounts required to pay EMI to the bank. The bank is willing to provide the home loan as I will be a co-borrower. Will I be able to get the tax benefits on the loan repayments even though I will neither be a owner or co-owner of the property?

Ans: You have raised a very interesting question. Under Section 64(i) (iv), the income arising to the spouse of the assessee from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration is clubbed as the income of that individual. In simple English it means that the income arising out of the house that is purchased from the cash gifted by you shall be taxed as your income.

 It is clarified under explanation 2 of Section 64 that "income" includes a loss. Therefore, the loss that arises from the self occupied "house property" will be taken as your "loss" and be allowed to be set off against your other incomes such as salary or income from business or profession. However this interpretation is not free from doubt and you should take expert tax advice since this is a highly technical issue.

  The deduction under section 80C for repayment of the capital portion of the loan will not be available.

Thanks,

K K

There are many advantages of taking a home loan in joint name. There are tax benefits, joint benefits etc.

Tax benefit:
If the owned property is being used for living, the annual value of the said property is deemed to be nil. Moreover, you could claim a deduction for the interest paid on the home loan (for purchase or construction) up to Rs.1.5 lac, (subject to conditions). This would result in a loss under the head - house property of up to Rs.1.5 lac, which could be set off against other incomes.
If the property is let out, the actual amount of housing loan interest, without limit, could be claimed as deduction. Also, an individual can claim a deduction up to Rs.1,00,000 for re-payment of the principal amount u/s 80C of the Income Tax Act, 1961.

Joint benefits:
It is very advantageous to buy a property in joint name as each individual has the right to claim tax benefits. So if a property is owned by husband and wife together then both are entitles to claim deductions individually.
There is no rule as to the number of co-owners or who the co-owner is (brother, spouse or parents).
Following are the points to consider:
• The house should be bought in the joint name and care should be taken to keep the proof of co-ownership.
• The housing loan should be taken in joint names.

Repayment
The repayment of the loan should be done individually or from their joint bank account. The funds in the account should be contributed by the co-owners in proportion to their ownership/loan. Co-owners should have their independent sources of income from which the loans are re-paid.

Tax benefits are available in proportion to the joint ownership and the loan taken by the co-owners.

Additional benefits:
• If more than one person takes a home loan then income of all the co-owners will be considered by the lenders. This can help increase the size of the loan.
• In many states, a lower property registration fee is levied in case the property is owned by women either individually or jointly.
If husband and wife jointly own a property reduces the succession issues.
• Buying a house jointly facilitates a larger loan as income of all the co-owners would be considered by the lenders.

regards,

ratan

Dear KK,

Thanks, I also want to in case the amount paid by brother who is filling his return and paid the interest of brother's loan and amount is not returnable. who will claim the interest on loan