INCOME TAX BENEFIT FOR HOUSING LOAN

INCOME TAX BENEFIT FOR HOUSING LOAN

ELIGIBILITY

You will be eligible to claim both the interest and principal components of your repayment during the year.

·         Interest can be claimed as a deduction under Section 24. You can claim up to Rs. 200,000 (Rs. 150000/- up to A.Y. 2014-15) or the actual interest repaid whichever is lower. (You can claim this interest only when you are in possession of the house)

·         Principal can be claimed up to the maximum of Rs. 150,000  (Rs. 100000/- up to A.Y. 2014-15) under Section 80C. This is subject to the maximum level of Rs 150,000 (Rs. 100000/- up to A.Y. 2014-15) across all 80C investments.

·         You will need to show the statement provided by the lender showing the repayment for the year as well as the interest & principal components of the same.

Note: For claiming maximum benefits under Section 24, the construction of the house has to be completed or the house has to be acquired within 3 years from the end of financial year in which the loan was taken

Can the Benefits Availed under Section 80C Be Reversed?

 

Yes, it can happen if you sell the property within 5 years from the end of financial year in which the possession of such property is obtained. In such a case, the aggregate amount of deductions availed for such housing loan in the previous years shall be added to the income of the assessee in the year of sale and taxed accordingly (as per income tax slab). This is in addition to any capital gains taximplications that may arise on sale of such assets.

Are There Any Tax Benefits for Loans Taken for Home Renovation/Repair?

if the loan is taken for repairs, renewal or reconstruction, the deduction limit (for interest payment under Section 24) shall be capped at Rs 30,000. There is no provision for availing tax benefits beyond Rs 30,000 per financial year for loans taken for repairs/renovation/addition etc.

For any loans taken for any addition, alteration, renovation or repair of house property after issuance of completion certificate (or after the property has been occupied or let out), there is notax benefit for principal repayment under Section 80C.

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