Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: list of goods taxed at 4% :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: Central Excise rule to resale the machines to a new company :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: TDS :: form 3cd :: VAT RATES :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: ACCOUNTING STANDARDS
 
 
« General »
 Tax breather for foreign investors: All you need to know
 What the increase in tax collections does not tell us about Indian economy post demonetisation
 India’s crazy retrospective tax on foreign funds will tarnish country’s reputation
 How tax related, PAN grievances can be resolved through E-Nivaran
 Tackling income tax exemptions for equities and agriculture
 Amfi wants tax benefits for retirement plans
 Top five factors which could chart market direction in the coming week
 Tax rate hikes boost shadow economy
 Tax mop-up may decline in new amnesty scheme
 Weeks before Budget, Finance Minister Arun Jaitley lists out benefit of low tax rates
 Second home loan tax benefits

How to maximize tax benefits on a joint home loan
November, 20th 2014

Some of us think that taking a loan to buy a residential property is not a good idea and so, they start saving some amount from their monthly income into recurring investment or a Systematic Investment Plan (SIP) offered by mutual funds.

However, financial planners recommend that for acquiring a house for self use, one should go for a housing loan and pay EMIs in place of going for recurring investment or SIP in other investment product. Let's discuss the benefits of taking a home loan under income tax provisions.

One can get tax benefits through home loan under two different Sections of Income Tax Act.

a) Under Section 24 - Deduction on interest on home loan for self-occupied property up to Rs 2 lakh.

b) Under Section 80C - Deduction on repayment of principal amount on home loan up to Rs 1.5 lakh.

Let's take an example that Mr. X takes a home loan on which he pays Rs 1 lakh as EMI, i.e. Rs.12 lakh in one year. Out of Rs 12 lakh which he pays every year, Rs 4 lakh goes towards repayment of principal home loan and the remaining Rs 8 lakh towards the interest of the loan.

Tax Benefits under Section 24 and Section 80C: Mr. X is eligible to claim tax benefits under Section 80C for the principal repayment of the home loan and under Section 24 for interest components. He can claim deduction up to Rs 1.5 lakh along with all other permissible instruments like, life insurance premium, PPF, ELSS, NSC etc under Section 80 C and up to Rs 2 lakh under Section 24.

Total deduction will be Rs 3.5 lakh and if Mr. X is in the highest tax slab, he will get a tax benefit of Rs1,05,000.

Tax Benefits on Joint Home Loan: One can avail tax benefit on home loan up to Rs 1.5 lakh under Section 80C and 2 lakh under Section 24. But if you go for a joint home loan along with your spouse in the ratio of 50: 50, then both of you can claim these benefits separately. So the combined limit will be Rs 3 lakh under Section 80C and 4 lakh under Section 24. This can reduce your overall cost of loan for the family considerably.

Total deduction will be Rs 7 lakh and if both spouses are in the highest tax slab, they will get a tax benefit of Rs 210000/- which is just double compared to an individual home loan, although this provision may vary from person to person.

Before going for a joint home loan, you should mutually work out your ownership share if you wish to optimize the tax benefit. That is, if you and your spouse own the house jointly in the ratio of 50:50, both can claim deductions in equal proportion. Therefore, if your tax slabs are different, you need to work out your ownership share in a manner that the spouse in the higher tax bracket owns a bigger share.

Please note that it is essential to be co-owners to be eligible for tax benefits. The co-ownership share also plays a role in determining your deductions.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Reengineering Software Re-engineering Software Reverse Engineering Software Reverse Development Software Change Modulation Software Conversion Software Re-creation Software Re-development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions