Is flat purchase registration charge allowed tax benefit?

Tax queries 508 views 4 replies

AP

Trainee

83 Points Joined August 2012

Can anybody please clear my doubts regarding tax calculations involving home loan. Both I and my wife are salaried and we have taken joint home loan for an apartment our own use. This is under construction but is likely to be given to us within February 2013. We will have 50% ownership each and we are paying EMI equally starting August,2012. The TDS amount deducted from my salary is based on an estimate and now I am required to give details of entire income and tax deduction for FY 2012-2013. If amount of income tax deducted so far is less than what my calculation shows, excess tax will be charged as TDS for remaining months. My doubts:

First: I can estimate both home loan principal and interest repaid till march’13, but where is the tax deduction due to interest (u/s 24) reflected in form 16? The form shows only chapter VI-A (80C-80U) deductions.

Second: The registration and stamp duty amount is a part of home loan taken in our case. In this case will we be able to get tax benefit due to registration and stamp duty paid (80C)? I am confused since we are not using our saved money for this but bank’s money (taken as loan) here so probably we are not entitled to tax benefit. In case we are allowed the benefit, should I include this tentative amount in tax calculation since registration will be done in future (may be Jan/Feb, 2013) so I cannot claim at this moment. Is this correct?

Replies (4)

Ravi Kumar Mahaur

CA-FINAL

202 Points Joined August 2010

(1) you can claim deduction u/s 80C on paid (not estimated) amount of loan which includes principal and interest thereon.

(2) you can also claim the stamp duty, registration and other charges related to such purchase. It does not matter that it is included in the loan amount. If you had paid such charges than you can claim such expenses as deduction.

Giridhar S Karandikar

Team Lead

7558 Points Joined November 2011

as the property will be given in F.Y. 2012-13, so you cant claim any deduction on account of interest for this year. However from F.Y. 2013-14 you can claim deduction of interest paid upto Mar13, in five equal installments. Also the interest paid in F.Y. 2012-13 you would be eligible to claim that also. However the total interet in each of your case shud not exceed Rs. 1.50lacs.

However for principal you can claim teh deduction u/s 80C even if the property is not handed to you. Yes you can also claim the deduction on account of Stamp duty & REgt chgs paid for purchase of property u/s 80C. Even if you are using the bank's loan money for pymt of stamp duty, the emi would be paid from your taxable income itself. so this is not an issue.

AP

Trainee

83 Points Joined August 2012

Thanks a lot. I learn two important lessons here. 1. Even though the flat is purchased in Prev Year 12-13, and interest has been paid till March'13, deduction can not be claimed for AY 13-14 but can be claimed from AY 14-15 onwards. 2. Both I and my wife are eligible for max 1.5Lac deduction separately (earlier I thought this max amount will be halved for each of us). But I am confused since I knew max deduction under 80C is 1Lac only. How can it become 1.5Lac in case of Home loan repayment? Or is the principal deduction u/s 80C and interest deduction u/s 24? Please clarify. Thanks.

Giridhar S Karandikar

Team Lead

7558 Points Joined November 2011

Interest including pre-emi interest upto 1.50 lacs each is eligible for deduction in case of each of the co-owners u/s 24.

Principal u/s 80C to the extenet of 1lacs is eligible for deduction in case of each of the co-owners. This amount is eligible even if the assessee has not the possession of the proprty.