Tax saving on home loans

Hi all,

Owning a house is everyone´s dream. More and more people are buying a place to live. Research shows that the average age of individuals with own house or accommodation has come down from 42 to 31 years. With increasing number of households with double income( both husband and wife earning), owning a house is no more a distant dream for many.

Also, many couples go for a home loan even if they can fund it with their own money.

The tax benefit on the home loan:
The EMI (Equated monthly installments) of the home loan consists of two components: The interest and the principal. The interest component is quite high in the initial years. The banks give a break up of the interest and principal for EMI for a year, upon request.

• When the house is self occupied( occupied by self or family member), the deduction on the interest available is 1,50,000. In practical terms you can deduct this amount from the taxable income per annum.

• When the house is let out, the entire interest paid is available for deduction, and can be deducted from the NET ANNUAL VALUE( NAV)of the property, which is income from property minus municipal taxes.

Apart from this,principal component upto a maximum of Rs1,00,000 is allowed under sec 80c.

Also if the loan is taken in joint name,i.e in the name of both husband and wife, both can claim the above deduction, provided wife is an income tax assessee.

Hope you all find this useful.

Regards,
Yamuna.

hi yamusarna,
thanks a ton.. u have made clear the most confusing part..
one doubt.. if we take house loan in both husband n wife's name both can claim for ful amount or we have to split it among us??? kindly forgive if my question is silly

Hi Deepi,

According to me no question is a silly question,so far as the answer makes sense to you.So no worries.Your question is not silly at all.
So the answer for your question is this: You can individually claim the benefit of 1,50,000 on interest and 1,00,000 on the principal.

Hope this clarifies your doubt.

Take care,
Yamuna.

dear yamusarna,

I feel there is a slight miscommunication here.

If the home loan is taken is taken in both names and both are assesees,

Interest amount can be claimed 50% each as the interest is allowed on due basis.

and the principal amt can be claimed based on payment.

for eg. If the share of the hus. is more than the wife. the hus and wife cannot claim the same amount(for principal)
The wife will qualify for the amt in proportion to her payment towards the principal amount.

To avoid these confusions, now a days the banks ask the people to pay from the joint account so that Both get the equal share.

Hi Kamala,
I guess you are right. When it comes to avail benefit, it will be to the extent of contribution.
I was basically communicating about the ceilings, of the benefit on the interest and principal.
Yes, the wife will have to be an assessee and also must be contributing towards the loan repayment, else anyone having a pancard will start availing the benefit.

Thanks for clarifying.I wanted to mention it, but somehow missed it.

Keep contributing,
Regards,
Yamuna.

thanks yamusarna