4 Home Loan rules most of the investors don’t know about

POSTED BY manish ON February 22, 2011 COMMENTS (566)

Can you claim tax deduction for your under-constructed house? Can you claim tax for the home loan taken from your friend and not from Bank ? These are some of the questions which are not generally discussed over and lot of investors have no idea about actual rules. In the video below I will talk about four not so known rules of home loans . Keep reading ! . Readers on email can watch the video on this article.

1. Tax deductions for House under-construction

Can you claim tax benefits for home loan taken for under-construction house ? A lot of investors assume that they can claim tax deductions and without doing much research, they go ahead with the loan. However they should know the fact that claiming tax in case of under-construction house is different. You cannot claim the tax deductions for the principal amount for under-construction house. You need to have possession and certificate of ownership to claim tax under 80C. However Interest part is little different. You can not claim the interest amount, unless you get the possession of house . However you can always claim the deductions later in 5 equal installments for next 5 yrs from the end of financial year of possession.

Example : Suppose Ajay bought a house on loan on 5th June 2010 and he pays total 4 lacs as interest in next 2.5 yrs and gets possession on 7th Nov 2012 . He will be able to claim this 4 lacs Rs in equity installments in the next 5 yrs period , which is 80,000 per year in 2013 – 2017 . However the total limit for exemption will still be 1.5 lacs per year.

2. Selling the House before 5 yrs reverses the tax saved earlier

We think of saving tax, but once the tax is saved for a particular year, it does not mean the story ends here. The tax benefit under sec 80C is allowed for home loans considering the condition that it wont be sold before 5 yrs from the date of purchase. Read some nice tips for house buying from real buyers

If you sell your house before the expiry of 5 yrs, all the money you saved under sec 80C in earlier years will be deemed to be your income in the year of sale and added to your salary. For example, if you bought the flat in Oct 2010 and in next 4 yrs you saved 1 lac in tax under sec 80C, then this 1 lac will become your income in the year of sale and will be taxed . However interest component once saved is saved and it wont be reversed.

The tax benefit under section 80c is allowed subject to the condition that house property should not be sold before a period of 5 years. If you sell the house before the expiry of five years from the end of the financial year in which you obtained the possession, the deduction will be discontinued and the entire tax deduction claimed in earlier years under section 80c – for repayment of principal component of the home loan – will be deemed to be your income (in addition to capital gains) in the year in which you sell the property. However, the housing loan interest deduction claimed under section 24(b) won’t be reversed.

3. Loan taken from Friends and Family is eligible for Deductions (Interest)

Incase you want to take loan from your friends , parents or any other person , you can still claim the interest on the loan under sec 24 , which is upto 1.5 lacs per year . However you can not claim the principal amount under sec 80C, that’s applicable only if you take up the loan from some Bank or financial institution . So you don’t always need to take the loan from Bank. if you can take it from a friend or Family , you can still claim tax deductions on Interest part .

4. 80C is not allowed for loans taken for Extension or Renovation of House

If you take a loan for extension or renovation of your existing house, in that case you can not claim the principal part under sec 80C, but you will be able to claim interest amount under sec 24, but the limit in this case is only upto Rs 30,000 for self-occupied properties. However for houses which are let-out (rented or second home which is not occupied) , there is not limit for tax deduction.

Comments ? Which one of above 4 facts you didnt knew about ?

566 replies on this article “4 Home Loan rules most of the investors don’t know about”

  1. Pushpaq says:

    I want to renovate my ancestral home. Can I get home loan for that?
    If yes, will that loan be of longer tenure?
    And how much will be the interest rates?

    1. Hi Pushpak

      This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that


  2. Manjeet Deswal says:

    Hi Manish,

    Can you tell me the thumb rule for balance transfer in home loan? I mean how do I know whether it is beneficial to transfer the loan to another bank for lesser interest?
    I have got a home loan from LIC. THe current interest is 11.4% since the initial lockin period on fixed interest of 10% for 3 years is over. When I requested them for a transfer to SBI on 9.1%, they offered me 9.95% on the total outstanding. I have already repaid 11 Lakh from the initial 40 lakh loan. So, the outstanding now in less than 27 lakh. LIC representative told me that it is beneficial to stay with them at 9.95% rather than switching since I have repaid this much already and the principle deduction has increased.
    Could you please suggest?


    1. I think you should switch. The loan outstanding is good enough for now ..

  3. Alok says:

    I booked a flat in a project in mid 2009. In April 2010, home loan EMI started. The project got delayed and it is complete now, August 2016. I havn’t taken the home loan benefits till date, neither on principal, nor interest. Please advice, how can I avail tax break on home loan. Also, is it good to close the loan account now, since I got some money to do it ? If I close the loan now, can I still get the home loan benefits, if any ?

    1. You can claim the tax benefit only if you have the occupancy certificate, else you cant.

  4. Krishna says:

    Hi Manish,

    we took loan on my name as co applicant and my wife as applicant and she is the owner for land and house. I am paying the money. can i get tax exemption. do i need to get any gift deed/sale deed from my wife?

    Thanks in advance

  5. DJ says:

    Hi Manish

    1. If I get renovation/maintenance in my self occupied home (with my own income i.e without taking a loan), can I claim in tax deduction on the expenditure occurred? I do have all the receipts for the material purchased but not for the labour

    2. For renovation/maintenance of my second property for which I have taken possession but not yet rented out can I take any tax deduction?


    1. 1. NO , there is no concept like that

      2. No

  6. Sachin says:


    1. A simple paper stating about loan is enough !

  7. Tom says:

    Hello Manish , Trust you are doing good.

    I have taken a home loan from a bank to construct my third house but the loan amount is not sufficient and my father has agreed to help me with some money.

    I understand that I can claim the tax benefits under section 24 for the interest that I will be paying to the bank as well to my father .

    My father is a retired school teacher and pension is the only revenue that he has . He does not have a PAN. Since I am planning to pay the interest and return the principal in chunks to him. Could you let me know what proof / documents /certificates that I need to produce to claim the tax benefits u/s 24 ?

    Tom M

    1. Tom says:

      Just wanted to mention that the loan type is – ‘loan against property’

    2. A simple plain paper document mentioning about the loan should be enough

      1. Tom says:

        Thank you. Appreciate your help.


  8. Sachin says:

    Hi Manish,

    I have taken a loan on 19th March 2015 from UCO . Disbursement happen on the same day.

    When i am checking on UCO login , It shows my first Installment date in 30-Sep-2017 .

    I have already paid interest for 19th to 31st March 2015

    1) When i generated Provisional TAX Certificate (to Submit in my Company for Tax Benefit) , Its showing very less amount for FY 16-17 .Is is because of incorrect First Installment Date ?

    2) What Documents i have to submit for 80C and Tax benefit on Interest.

    Please suggest


    1. Hi Sachin

      You need to check this with the bank itself for the 1st point

      For second point, that statement itself is good enough. But you dont have to submit anything !

  9. Gaurav says:

    Dear Mr. Manish,

    Regd. point #3, i.e. taking a loan from a family member/friend, I want to confirm if the rebate under Section 24 can be availed for a property before possession too?

    1. No , it cant .. that rule still applies!

  10. Sachin says:


    I have one question regarding “Selling the House before 5 yrs reverses the tax saved earlier”, will it be consider the FY or Actual Years?

    For Instance if I have purchased a property in Dec 2011 (which come under FY 2011-12) Will my Five years will be 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 or Dec 2012, Dec 2013, Dec 2014, Dec 2015, Dec 2016?. If it financial year that means If I sell the property in April 2016 it will not be considered?

    Sachin Gupta

    1. I am not sure on that, but it should be exact yrs !

  11. vikash says:

    I have closed my home loan on July 2016 by selling off the flat and then i got the same flat on rent from aug. 2016. Please let me know if i can get benefit for home loan and HRA as they were not applicable on the same time on the taxable year 2015-2016.

    1. Yes, you can get both now

  12. shan says:

    Mom ( who is home maker /not working) sold plot in may 2013 and we put whole 15 lakhs in capital gain account. Coudnt find suitable property.just 2 months left after which total 3 yrs will get complete and I will have to pay tax.
    Suggest best way out.
    My wife (working having salary 10 lakhs) purchased home in nov 2011 with home loan 20 lakhs. Valuation of this home has appreciated to 50 lakhs.
    CAN my mother using her capitalgain amount purchase 40% ownership from my wife home.
    ADVICE please

    1. You can invest the money in REC or NHAI bonds !

  13. Bharath says:

    Person X and Person Y Has taken a home loan together in March 2013 with 50% -50% ownership
    House registered in Feb 2016
    From March 2013 till march 2016 Interest paid is 10Lakh, I understand this aggregated 10lakh amount to be divided in 5 equal years and to be claimed in 5 years.
    My question is

    1) So for FY 15-16 can i claim Interest component for tax benefit? or should it be from FY 16-17?

    2) can person X and Person Y each claim 2 lakh as interest component for FY 15-16?
    or is it 1lakh for person X and 1 lakh for Person Y?

    3)please confirm the understanding, Interest component for FY 16-17 is max 2 lakh for each person X and 2 lakh for person Y?

    Appreciate a ton always!



    1. 1. Registration does not matter, its the possession year from when you can claim it

      2. BOth can claim upto 2.5 lacs per year, it was raised from 2 lac to 2.5 lacs recently in last budget

      3. Already answered

      1. Bharath says:

        By possession you mean legally –Occupation certificate is the binding document right? or is there any other legal document to consider?

        1. Yes, I am talking about occupancy certification here , not the physical possession

          1. Bharath says:

            Apologies for so many requests, and highly appreciate your patience

            My builder is saying to get OC is gonna be in April 2016 (then i wont be abel to claim 2l interest instead only 30K interest, completion of building in 3 year clause) but he can give me Builder Completion Certificate in the march 2016, will this document work for me to claim tax benefits?

            you said registration is not compulsory, do you have the link handy where i can look at that information in detail?

            Appreciate a ton, Thanks always

            1. There is no link as such, but a OC is required as a valid proof for claiming the interest.

  14. Bharath says:

    HI Team,

    amazing article kudos to the team!

    Recently i heard that Income tax benefits would be reduced to 20% if the possession of house is not taken with in 3 years from the start date of the loan. Please shed some light on this

    1) Is this accurate understanding?
    2) If yes then from which year is it applicable? (loan should be taken in which year or any such clause)
    3) If yes then with in 3 years of starting loan means “Day from the disbursement is started or the Day from the EMI is started?”
    (Well first one is bank just pays some money to builder and collects only interest from borrower and the EMI woudl start after 2 years.)

    I am confused, i am relying on you guys for information.
    I did lot of google no help ther 🙁
    Appreciate your efforts


    1. Hi Bharath

      1. Yes
      2. From the time loan is taken
      3. Day from when disbursement is started

      1. Bharath says:

        Yes thank you so much.

        for readers this article explains clearly

        Double Whammy
        Looking at fine print of Section 24 of Income Tax Act, if you do not get possession of your house within 3 years from the end of financial year in which loan was taken; it will be a double loss for you.

        You are paying rent and EMI (or pre-EMI, as may be applicable) at the same time. Tax deduction on interest payment will come down to Rs 30,000 (from Rs 2 lacs). For someone in the highest tax bracket, this will result in maximum loss of ~Rs 56,000 per financial year. Additionally, there will be no benefit for principal repaid during the construction period.

        For instance, if you took a home loan in July 2011 and you do not get possession of your house by March 31, 2015, you can avail a maximum tax deduction of Rs 30,000 per financial year (after you get possession of the house). A double whammy indeed.

        If your builder does not deliver on time, not only do you have to go through a lot of mental agony, you might even have to go through a lot of financial pain.

  15. Abhishek says:

    Hi Manish,
    I’m planning to buy an under construction property. Say, my loan disbursement starts in Apr, 2016 and if by Mar, 2019 I don’t get possession (due to delayed construction) then can I still claim interest exemption for these 3 years once I get possession ? Assume that I get possession in Mar, 2020 and that I have one more self-occupied property in the same city.
    Thanks a lot.


    1. Yes, you can get it !

  16. Shrinivas says:

    I m planning to close home loan in March 2016. I have taken tax benefit for five years i.e. interest & principal . Next year, can I show HRA as same house has owned by my wife?

    If not please let me know is there any other way to save the tax

    1. No you cant do that . There is no way to save tax if you dont have the house loan

  17. m says:

    I have sold my house in 10.1.2015
    Than can i Get benifit of housing loan interest
    paid upto 31.12.2014
    Interest is 60000
    Self occupied
    If yes in which section ya case law
    If not so why

  18. Ramesh says:

    I took joint home loan me , my mother and brother of 25lac.
    property is on my mother name.
    me and my brother is paying loan EMI.

    can we both avail tax benefit of 80c and section 24 ?

    i paid stamp duty of 2lac by cheque for property registration on my mother name.
    can i claim for tax ?

    1. No , the property has to be on the name of the person who wants to claim the tax benefit !

  19. Naveen says:

    Need advice
    I am salaried, purchased a resale apartment in April 2015, am I exempted for resale property? Loan taken from HDFC Bhiwadi.
    It’s a joint loan, though I am making 100% payments from my sal account? Ownership on both my and my wife name..
    What all docs to submit considering purchase of resale prop if i need to take 100% tax benefit.
    Thanks in advance.

    1. You will get all tax benefits as you are paying full amount

  20. Frank says:


    I have a house that I bought jointly with my mother in June 2012 on a home loan fro HDFC Limited. Since I am migrating abroad and my brother is going to be taking care of my parents, I have made a gift deed and transfer my share of the property to my brother and sister in law recently.(HDFC sanctioned the deed and the loan has been transferred to them). My question is that since the property been gifted is less that 3 years old, will I have to pay taxes for the principal deduction that I have claimed for the last 3 years? I have not sold the property but it is a gift deed. Any help would be greatly appreciated

    1. I dont think you will have to refund back the benefits .

      1. Frank says:

        Thank you, Manish!

  21. Rohit says:

    I have a home loan running where I am the main applicant and my mother is the co-applicant. The house is also owned jointly by both of us. I stay in the same house, can I claim home loan tax benefits and also pay rent for 50% of the property owned by my mother, and thus claim HRA exemption for that 50% portion? I understand for spouse this is not allowed, but what in the case of parent-child co-ownership?

    1. No Rohit you cant do that

  22. Abhishek says:

    I need some information regarding Home loan interest. I bought a flat in rohtak in AUG-2013 and got possession in OCT-2015. I have taken a loan from HDFC bank in JAN-2014.
    I have not claimed Home loan interest in any of the previous year income tax.

    Can I claim last year interest and current year interest in this year return?

    This is my first flat. So how I can take benefit of 80EE?

    Thanks in advance.


    1. No you cant claim last year 80C part, but for interest you can claim it for nxt 5 yrs , but the total limit will be 2.5 lacs only for interest part !

  23. ManishPatel says:

    Loan taken from Friends and Family is eligible for Deductions :
    1. What are the document require to claim interest from income tax?
    2. If I have one home loan running from DHFL and some down payment I had taken from My relative in those case can I claim both paid Interest from Income tax?

    Please suggest.

    1. 1. Just a document which is self created and says that the loan was given

      2. No , not on downpayment . It comes under 80C

  24. Chetan says:

    I am going to buy new flat (ready possession). My CA had charged me fees for IT for FY 2013-14 and FY 2014015 but still not filed the IT-returns. Am I eligible for home loan (SBI) if my CA file both years IT-return on same day? However, I have paid VAT returns regularly (quarterly).

    Please reply soon

    1. Mostly yes, all the home loan guys need is the ITR . It does not matter when it was filed.

  25. ganesh says:

    hi sir,

    I am working in pune but i want to build new home in my native place. bank can pass my home loan approval.

    1. If land is in your name, then YES

  26. tamilselvan says:

    if the value of the property is 50 lakhs, the bank can give only maximum of 40 lakhs. if i am arranging remaining 10 lakhs from mortgage of existing first home / gold loan whether i can claim interest u/s 24 for whole of 50 lakhs or only 40 lakhs?

    can you shed some light on this?


    1. Its linked with your EMI , not loan taken

  27. ramiya says:

    Hi !

    I am married and wish to buy home from my brother, but bank is not sanctioning home loan as we are blood relations.

  28. Tapas says:

    Hi Manish,

    My Uncle owns the land and construction is half complete. Due to scarcity of funds I am trying to go for a Home loan which I can easily accomodate which they cannot. So can you please advise how I can go for this home loan along with tax exemption rules for the same.

    1. First the house has to be in the name of the person who is taking the loan, only then the tax benefits can be taken

  29. Raj says:

    Dear Sir,
    My row house construction became complete in JAN 2015 and builder has given completion certificate. I have not done registry of the property yet and I don’t have possession letter. Can I take rebate on the interest paid and principle amount paid this year. Please advice.


    1. No you cant unless you have registered it

  30. Abid says:

    Hi Manish,

    I have a house loan whose EMI started from Feb 1 2015. Its registration completed in June 2015. I have not taken possession yet. Please advise if I can claim the home loan tax benefits in ITR1 which I need to submit before Aug 31st?


    1. No , if you dont have possession, then you can claim benefits !

  31. Vipul says:

    Hi Manish,

    I bought a flat in Pune in 2007 and got that registered in the same year. I got the possession in 2011 but since the registry was done I claimed the income tax benefits even before I got the possession.

    Now got a notice from IT department for claiming the benefits before possession.

    Did I do any wrong?

    1. Yes, you did wrong.

      You cant claim any deductions if you dont have possession letter. So you wrongly took the benefit. You will now have to pay the tax for those years ! . Contact a CA now .

  32. Phusti says:

    I have passed a home construction loan of 8 lack in 2012 and prepared a home. but in last year my parents was came with me and live with me so i created two more rooms (which is not included in home loan paper naksha) . but i need some money so i am thinking to extended my current home loan 8 lack to 12 lack.
    a) is it possible?

    1. Hi Phusti

      Your cases is a bit complex and I think we are not the right people to comment on it.

      My suggestion would be hire someone who is professional in this area and consult them


  33. Vimal Gupta says:

    Hello Manish,

    I have a Home Loan of Rs. 15LAC from LICHFL, which i have taken on july, 2013 at a interest rate of 10% with 2 years fixed period. Now they are incresing my interest rate to 11.75% which is much higher so Now i want to shift that loan from LICHFL to My Parents. (I want to close loan from LICHFL By taking the loan from my parents) so that I will pay the EMI to my parents.

    I want to know what steps i need to take to achieve above and how will i get the tax benefit on the home loan from parents and what procedure i need to follow for the same.


    1. I think it will be very complicated, because loan has to be on the name of a person who have the name in house .

  34. Satish Aher says:

    I had a under construction property at kamothe,,,registered , stamp duty paid in Yr 2011 and Fully Loan paid which was taken under Home loan..Can i mortgage the same property to bank without OC in hand and apply for Mortgage Loan purpose for Buying Farming land…
    secondly this loan amount would be applicable under 80C tax rebate..

    1. Hi Satish

      Only bank can answer this. Its very specific query

      1. Satish Aher says:

        Thanks Manish….

  35. Bipul says:

    Hi Manish,

    Could you please clarify my confusion on below points.

    I am working in a foreign bank IT department as Software professional in pune. I am basically from Bokaro Steel city. we have a house (Home loan 8 L) in my home town on my mother’s name. My both parent are borrower in that loan. Now we need some money.

    So we have two option –
    1. Clear the loan amount and sell it to some one out side.Its current price 30 L or
    2. I can purchase this property by taking a home loan(25L), so house will be within us and also I can take the tax benefit of that loan, so i am planning to purchase that property after clearing all the previous loan amount on that and then take a loan on my name.

    Confusion or Query
    1. whether ,Sell and purchase of property within family (between mother and son) will effect my loan eligibility criteria, as we are two brother(he has no objection on this decision, its mutual).?
    2. Banks will give me loan or not as i am working in Pune and property is in Bokaro.?
    3. I will not be staying in that house but my parent, So how can i use the tax benefit of this loan.?

    Thanks in advance

  36. Dheeraj says:

    Hi Manish

    For salaried class, one of the way to save some tax is investing in second house and get the deduction on the interest part of loan repayment.

    I would like to understand that if I invest in land for which possession would be given in next 2-3 months. and I build the same in next 10 months post possession. Would I be eligible to show loss of income to cover the interest part post building the house on land.

    If yes, from which date 1. possession of land or 2. build completion ?

    Also, if its option 2 above, can I claim back the interest loss in next 5 years for the interest paid between possession of land until house build.

    Please help.

    1. Hi Dheeraj

      I am not aware of this, hence cant comment

  37. KT says:

    I am planning to construct a house on a plot owned by my father in our village. The estimated cost of construction is about 20 Lakh. I have two questions:
    1. The land is owned by my father. Can I get a home loan for building a house on that land?
    2. If the answer to the first question is yes, then can I claim tax benefit from the home loan.

    1. No you cant get a loan

  38. rajesh says:


    I an employee and an architect. i have taken a home loan last month and building my own house..30 % of the construction is already over and now my friend is asking the building for better price. is there any problem selling it to him.. pls note i have not claimed income tax benefit till now..in that case can i go for one more loan immediately?

    1. You can take additional loan if you are getting it !

  39. neeraj goyal says:

    I am living in a apartment which i own .. i bought another apartment (2nd one ) in my name ( primary) and my wife. Last year i got possession of it and is on rent right now. For this apartment i took loan from LIC( 50 lac ) for which all the EMI are paid by me . No this is first year when i will be claiming tax benefit on interest paid is last 3 years.
    My question since i have paid all the EMI can i take 100% tax benefit

    1. Yes you can take the benefit

  40. Allwyn Dsouza says:

    Hi Manish,
    I have a few questions.

    1. Is possession letter sufficient to claim the tax benefit or do I need to have the Occupation certificate as well. As in Mumbai many people are staying without OC as the Builder doesn’t provide it for may years.
    2. In my case, the OC has arrived on 14th April 2015. However if I take a back dated possession letter of March 2014, can I use the possession letter for claiming tax deductions in FY14-15.
    3. I work in Mumbai and have purchased a house in Bhandup (Mumbai). If i stay on rent in Thane (outside Mumbai city limits) can I claim HRA as well as tax exemption on interest on my house by letting it out. Coz technically i would be travelling to work from another city while owning a house in my city of Work

    1. I think its a bit complicated case and beyond our scope of knowledge. Better hire some professional who deals in that area and take personal advice.


      1. Allwyn Dsouza says:

        Thanks for your reply. Can you suggest me any expert in this matter as the one I consulted was of little help.


        1. No idea on that. .catch some CA

  41. Gajjan says:

    Hi Manish,

    I have query regarding repayment of home loan
    I am in 30% tax slab, can you advice which option is best.I have applied for SBI max gain loan of 21 Lakh amount.(As banker told minimum amount for Max Gain is 20 lakh)
    1)Pay EMI without any repay & invest additional amount in MF ,as net interest paid to bank will be lower as i will save 2 Lakh interest (60K will be saved) every year for tax benefit.
    2)Clear the loan ASAP without any other saving

    Let me konw your suggestions

    1. I am not clear on SBI Maxgain as a product

  42. Sunny says:

    Hii Manish ,
    I am big time fan of your ! Cheers for your bullet replies , My quesry is :
    my salary is 45k and my wife’s salary is 85k . We took Home loan of 19 lakhs in june 2012 , we both are co-owner but my wife is the applicant for the loan . My wife pays the full Emi from her salary account and claiming the tax benefit . we got possession in April’14 and she is taking benefit of interest 24D as well as Principle benefit 80 c. Property will complete its 3 years in Jun’15 . we jointly taking another Home loan of rs 50 lakh . whose possession will be in Oct’16 and in Is it mandatory to give 20% down payment from Joint account only .
    1 Will the 20% contribution ratio decide the ownership percentage ?
    2. Since we will be taking 75(wife):25(me) benifit this time for second propert , do we need to open joint account and ECS Emi from that account ,
    3. Do every EMi need to be in ratio of 75:25 or i should pay 3 emi and she 9 emis in that financial year will solve the problem
    4.Do we need to document ratio 75:25 in builder sale agrement as owner ship percentage or we need to add in the bank Loan Agreement that loan payment will be in the ratio 75:25 .
    5.Or simple declaration on simple paper indicating that “I am claiming only 25% of the tax benfit under 80c and 24 d ” for every financial year of claiming Tax deduction .
    6. Can this Ratio will be constant throughout , till home loan is prepaid or every year i can declare what is our % of share of loan payment ,( Important if are prepaying the loan amount me 75% and wife just 25% )
    7.Can the stamp duty registration mandatory to be claimed in the ratio as 75(wife):25(me) or 25(wife):75(me) , as she is already claiming first loan benefit so i can take maximum benefit in this case .
    eagerly waiting for your answer


    1. Hi Sunny

      Actually the things you have asked will depend on bank rules. So the best thing is to clarify these from banks


  43. Rakesh Ranjan says:

    Dear Sir,

    I need one clarity about Home Loan Interest rule in Tax Exemption in the given scenario:

    Property : New & Under Construction
    Loan Approval Date: Jan 13
    Disbursement Date : Mar 13
    Tentative Handover Date : Oct 16.

    Sir pls clarify that

    1. Can i claim tax benefit for interest which i will be paying till Oct’16 from Apr’13 in next 5 years in equal amount?

    2. From Nov’16, will i be able to claim tax benefit on interest paid?

    Kindly help.


    Rakesh Ranjan

    1. 1. Yes
      2. Yes, if you get the possession !

  44. shravan singh says:

    Hello manish
    I have bought a flat in noida in june 2011 which was under construction,
    At present stage noida authority is not issuing completion certificate to any builders in noida since last one year due to NGT(noida bird santuary) issue.
    now builder has issued the provisional possession letter for fit out in march 2015.
    here costruction completed within three years
    then can i take rebate on home loan premium repayment & interest paid under section 80c & 24.

    1. Hi shravan singh

      The question asked by you is beyond our scope. Its suggested that you hire an expert on the issue and pay them for the advice.


  45. Vivek says:

    Hello Manish,

    I have already submitted possession letter last year to my (same) employer.
    As I am not in india and employer is aging asking for possession letter. (rest of documents, i have alredy submitted to my employer before moving out of india)

    Do i need to submit possession letter again to consider my Interest part benefit?
    Is there any rule defined for this kind of sutuation?
    does it not considered with already submitted possession letter with last year investment proof?

    Thanks & Regards,

    1. Hi Vivek

      I think its very specific problem which only your employer can comment on . I am not fully aware on this

  46. Sujeet says:

    My self sujeet bhujbal and currently we have brought resale property in Pune.
    i have some questions on tax benefit
    1.can i avail tax benefit for registration and stamp duty under 80C??
    2. What documents required for tax benefit ?? only registration bill enough or we have to submit full copy of property documents.


    1. Hi Sujeet

      1. Yes
      2. You dont need any document at the time of claim. You might need it later.

  47. Shruthi Sudarshan says:

    Hello Manish,

    this is a great info. Something that the bank/builder don’t mention EXPLICITLY.

    Though my doubts are almost cleared, I still want to ask you some Questions:

    I bought a flat in Dec 2014 and started paying Pre-EMI from Jan. The possession of the flat is around March 2016. My husband and I both are joint applicants for the home loan.

    Now my Qs:

    1. I cannot claim the Interest, till I get a possession certificate? Which is roughly around Jan of 2016??
    2. Since both my husband and I r joint applicants, can we both claim 1.5L each ? or is there a percent to it (for ex: 50:50)???
    3. I claim HRA since I stay in a rented house. From next FY, can I claim both HRA and Home loan interest for exemption?

    Please suggest.

    Thanks a lot for putting up this article, it is v v clear and tells u something that nobody does.


    1. 1. Yes

      2. You both can claim 1.5 lacs each .

      3. Yes you can do that !

      1. Pravin Pereira says:

        If it is a Self Constructed House (Only Labour Contract), How and from where do I get the possession certificate.
        For Claiming Both HRA (currenlty staing in Rented house) and Home loan Exemption can you share the section no. or the scan copy page from the Indian Income Tax Book. as unable to convience my company to allow exemption on both the cases.
        How many years we are allowed to take the exemption both HRA and Home loan exemption in case the construction is delayed by a year.

        1. Hi Pravin Pereira

          The question asked by you is beyond our scope. Its suggested that you hire an expert on the issue and pay them for the advice.


  48. Yunus says:

    Hi Manish,

    I got the possession of house in first week of Feb 2015, I have used 80 C benefits for Stamp duty and registration.
    Can i get the benefit for interest paid for the current month and the following month (to be paid).

    Thank You

    1. Yes you can get that also ! , but have you got the possession ?

  49. Makar Gupta says:

    I have taken loan for under construction property; for which I will get possession in Feb-15. My Query are
    1.Should I claim Loan interest part for full FY 14-15 or only for two month.
    2. Does it mandatory to do the registry of the property, for claiming tax deduction.
    3. I could not submit my papers to my employer; so is it ok if I claim at the time of filing return.


    1. Only for 2 months you can do it . Yes you will have to register it to claim tax deduction. Yes you can claim it later


  50. Ajinkya Bapat says:

    Can I know if I have taken a mortgage loan againtst my self occupied house, can I claim exemption under 80c for the interest amount paid and if yes whats the limit.

    Can I also claim exemtion for principal amount paid.

    Kindly advice

    1. No you cant. Its a loan against house , not the house loan !

  51. Prajay99 says:

    Hi Manish,

    I need some help on Sec 24 for I.Tax rebate. Specifically I have Query on Section 24 on the 3 Year Limit:
    “Deduction under this section is available only if construction is completed within 3 long years from the end of the financial year in which the home loan was borrowed”.

    I have taken a 30L Loan under SBI SURAKSHIT HL MAXGAIN AUG 11 for a Property which is under construction. The Loan Sanction Date was 19th March 2012 (FY 2011-12). The first disbursement happened on 19-04-2012 (FY 2012-13)

    So Technically what is the Loan Start Date of Loan (Is it FY 2011-12 or FY 2012-13) ?
    In view of the 3 Yr Limit, Is it March 2015 or March 2016 in my case, so that I get 2L expemtion (Not 30K If it exceeds 3 year)?

    Request your thoughts on this


    1. Anyways its from the exact date and not the year . So if you got loan sanctioned on 19th March 2012 , so now the 3yr limit will be on Mar 2015

  52. vin says:

    Hi Manish,

    I have query about home loan interest claim. I have loan since Dec 12 and paying interest. If I get possession in Feb 15 then can I claim interest for whole year (Apr 14 to Mar 15) or only partial (Feb15 to Mar15)? Also can I claim HRA as well?


    1. You can surely claim HRA , and for interest part you can even claim the old one !

      1. a_vinay says:

        Thanks Manish.

        Please clarify if below Interest claim calculation is valid…

        whole year (Apr 14 to Mar 15) + 20% (Dec12 to Mar13).

        Also one more query about second hosue… if second house in another city occupied by parents then do I need to use notional rent or Income can be considered as Nil?

  53. mahesh says:


    1. No she cant do it this way .. A person making a home loan request has to have all the eligibility criteria . In your case, why dont the son itself apply for loan !

  54. Peeyush says:

    Hi Manish,

    I want to confirm tax liability in below scenario –
    My wife has a property only on her name under construction ( we booked it in 2012), Still under construction and hopefully will get possession by JUN2015. We also bought second property on joint name. What if we my wife sells this property now and principal and profit earned is used to repay loan in second property? Will the profit be still taxable? What can be done to save taxes, shall i wait for registration to happen and then sell?

    Please guide us.

    1. If you sell it right now, the profit will be short term capital gain and there is no way you can save tax on that !

      1. Peeyush says:

        Thanks Manish,
        Shall i wait for 8 months more (wait for possession) and then sell it? would i be able to save tax?


        1. After 3 yrs, you will be able to apply indexation benefits . You will not be able to save tax directly because you cant use it to repay the old loan . But because of indexation only you will be able to save tax .

          Read on it here – https://www.jagoinvestor.com/2009/05/how-to-calculate-capital-gains-and-what_7801.html

  55. Vicky says:

    Hi Manish,
    I have a confusion regarding section 24 related to home loan interest exemption norm of 3 years from the end of financial year when loan was borrowed. I booked a flat in an under construction property in April 2012 and registration was done in June 2012 after taking a home loan from LIC. Please note that I have booked this property in the same city where I live.

    (i) Can you please confirm by when must I acquire possession to be able to get interest exemption limit of 2 lacs (as revised from this year) ?
    (ii) If possession is not acquired by the date (viz answer to my first question), is it true that I can still get 2 lacs exemption limit if I let out the property on rent instead of self occupying?

    As it is still under contruction, I am anyways not able to claim any tax benefit, hence looking for a confirmed date to atleast get tax benefit afterwards, please clarify my confusion.

    1. 1. from the date you took the loan
      2. Yes

      1. Vicky says:

        Hi Manish,
        Can you please verify your answer#1, my question is

        (i) Can you please confirm by when must I acquire possession to be able to get interest exemption limit of 2 lacs (as revised from this year) ?

        1. Within 3 yrs of taking the loan

  56. Raveendran says:

    Dear Sir,

    I am working in central government organization. My father is 63 year old and he is depending on me. At present there is no income earned by him. I want to know whether I can borrow money of around 2 lakhs from my father for purchasing a house and claim tax benefit for the interest of around Rs 40000/-per year paid to him. I am coming under 20% tax bracket. If I could claim this iterest I can save tax of Rs 8000/. Please advise.
    Thanks and regards
    Raveendran K

    1. Yes you can surely do that !

  57. arun vaidya says:

    Dear sir
    1)I have avail home loan from sbi nagpur Rs 25 lacs fro the period of 20 yrs .I have regularly pay EMI Rs 25100/-from two years(Dec-2012).Now i need Rs 3lacs for renovation.pls advice.
    2)sbi home equity schem is applicable for me?
    3)pls give your valuable suggestion

    1. What is SBI telling you on this ?

  58. kanchan says:

    Hi Manish,

    I am a salaried employee and pay an Income Tax of Rs. 32000/- per month approx.
    I had booked one apartment in April 2010 in Noida Extension and due to various litigation and other land issues, the project got delayed and am likely to get possession of the same in December 2014. For this property, I took loan in September 2010 in construction linked plan.
    Subsequently, I booked an underconstruction apartment in Ahmedabad in March 2014 for which I got loan sanctioned from another bank and took possession of property in August 2014. My place of work is Ahmedabad where I have been given a company accommodation and I dont plan to shift to either of my flats. The chances of both the flats being immediately put on rent are also minimal and hence both flats are likely to be vacant. My queries :

    (a) For the purpose of maximising IT rebates under Sec 24, which property should I declare as Self Occupied and which one should I declare as Rented? Can this be chnaged later in subsequent financial years depending upon availability of a tenant.
    (b)I have already paid interest of approx Rs. 2 lakh and principal of Rs. 4 lakh on Noida extension flat and interest of Rs. 85000/- on Ahmedabad flat prior to possession. How would this amt be treated?

    1. For doing that you would need the possession letter . then you can claim the house which has high interest in a year as the rented one .. and the other one as self occupied !

  59. Daniel Rosario says:

    Can someone tell me about home loan reconstruction norms and interest calculation after NPA as per RBI guidelines

  60. sujoy sarkar says:

    Dear Manish,

    I have taken 15L Home loan in CLP plan for a flat. I have already paid 95% payment to builders and bankers loan amount disbursed near about 100%. Now I am paying Pre EMI for home loan from April,2013. This time I am thinking builders will take more than 10 month to give the possession . Will i give Pre EMI or start full EMI?

    1. As per your agreement it must have been decided ! . What have you agreed on ?

  61. pavithra says:

    Can I save tax in 80C section for my site registration charge of 93,000 in NOV 2013.I have took site loan in HDFC bank with condition of constructing the house within 4years

    1. Yes you can claim it under 80C , I hope you are talking about stamp duty !

  62. suresh shah says:

    Whether a loan taken from Employees’ Co-operative society is eligible for deduction for repayment of loan u/s. 80C and interest us. 24(b) ?

    1. I think that should be possible if its marked as home loan . Better talk to a CA on this

  63. Alok says:

    Hi Manish,

    Need your help to know if 80EE benefit is applicable if I booked under construction flat in 2010 and still waiting for possession. There is home loan for that flat. Now I purchased one more ready to move in flat and would like to know if I can use 80EE benefit for this ready to move in flat in under construction flat.

    1. Alok

      Please open this question on our forum – https://www.jagoinvestor.com/forum

      1. alokchauhan1 says:

        Thanks Manish. I submitted this query as new thread.

  64. suresh shah says:

    I purchased a flat in joint name of my wife for Rs. 30 lakh for the first time and taken a loan of Rs. 15 lakh in my wife’s joint name in May, 2013 . My wife is having an another house in her name and claiming deduction of interest and loan, Can I claim deduction for interest u/s. 80 EE even if my wife is having a house in her name ?

    1. You can only claim the tax deductions for your share !

  65. Sangamesh.K says:

    Dear Manish/Ashal,

    I am buying 2 combined houses in my native. Currently i work in Bangalore.

    Planning to take a loan of 45L with 10.4% for 20yrs.
    I have calculated EMI amount 44600Rs from online EMI calculator.
    Consider my take home salary is around 65000Rs per month.

    I need some clarifications on taking home loan.

    a) Do i need to go for such huge EMI amount?
    b) If i am paying 44600 per month, rest will be 20000 in my hand. I think it is not sufficient to survive in the BIG cities like Bangalore. I need to run my family also with this less amount. But thinking in other way, early you pay the loan, more you relax on financial matters.
    c) what is the best EMI i can go for.
    d) Suppose if i prepay the amount of 10L after some months, will this amount will be deducted only on the principle amount(45L) or interest also.? Will my interest be reduced ?
    e) which amount i can take it consider for the section 24(home loan part).
    f) Please let me know the link for calculating the EMI with prepayment option.

    1. Overall I must say that take EMI which is maximum as per your limit. First make sure you keep teh amount for your survival and then use all the amount for EMI , also prepay at all the points where you can .


  66. Narayana says:

    Hi, I have taken a home loan with my wife as a joint applicant and registered the property in the name of myself and my wife. The EMI is being deducted from my salary account. Can someone plz explain how would I apportion the hba principal as well as hba interest w.r.t. both our IT returns. There is nothing written in the document abt the share between us.

    1. By defualt , its 50% : 50%

  67. Bala says:


    I am bala from kanchipuram Tamilnadu. My question only 2.

    I am the tax payer if i will buy a land in wife name, and i can able to avail the loan as well as i can able to show in tax.

    1. No , its not possible . You get tax benefit only when you take it in your name

  68. Rex says:

    Thanks a lot Manish !

  69. Rex says:

    Hi Manish,

    I reside in Delhi on rent and I purchased a property in Noida (co-owned by myself and my wife) in 2011 and took home loan for it. I haven’t taken any Tax benefits yet on that as it is still under-construction. Now, this month I purchased yet another flat in Delhi (this too co-owned by myself and my wife with a separate home loan). I will rent it out and I will myself continue staying on rent due to infrastructure issues. My wife is house-wife (non-working) and won’t be able to take any tax benefits. I intend to let both Delhi property and Noida property on rent.
    Q1) Is it beneficial to make my Noida house as ‘First’ property and put it on rent later (when I get possession) and for now take unlimited home loan’s Interest deduction for Delhi (second) property?
    Q2) Is it necessary for me to show rental income on my name to take unlimited loan’s Interest deduction for Delhi (second) property OR can I show ALL rental income on my wife’s name and still enjoy unlimited loan’s Interest deduction for Delhi (second) property? .. OR should I show partial rental income to me and my wife?

    Thanks a lot!

    1. 1. Yes, that seems to be more better option

      2. Yes, for your share atleast

      3. If you show everything on your wife name, then you cant show anything on your name for interest deduction !

  70. Murad says:

    Without co-applicant signature on all the documents like mortgage , loan agreement bank has disbursed the loan amount & started charging the interest on it though the cheque is not yet given to applicant. When questioned to them they said your loan is disbursed so interest is chargeable.And the issue is now co applicant is not ready to sign the loan agreement documents.Neither co-applicant income is clubbed for taking this loan nor the co-applicant is included in property agreement.Bank says without the signature of co-applicant they will not release the loan cheque to main applicant & if co applicant doesn’t sign the necessary document the loan will get cancelled.My question is how bank can charge interest on the amount which is not handed over yet to applicant . What is the way out

    1. Ask the bank what is the rule on this in writing . ANd if dissatisfied, go to consumer forum

  71. ugander says:

    dear sir
    i purchased a house in 2009 apr tokk loan from bank .and i am paying interest amount is 1,00000 per anum. in 2013 i again took loan form co operative credit society loan from my company for house repair. and paying interest amount is 20,000. and i am staying in that house only . and my doubt is can we claim the rs 20,000 as u/s 24 as home loan

    1. Yes, interest part can be claimed !

  72. Alok says:

    Hi Manish, I bought a flat in bangalore and got possession in June 2013. I started staying in that flat since June 2013.However my EMI started from MARCH 2012.
    How can i claim the tax relief on interest paid during financial year 2011-2012 and 2012-2013.

    1. Yes, for next 5 yrs in equal installments !

      1. Gaurav says:

        Hi Ashal/Manish ,
        I am getting a possession of my flat in July 2013 , which was regesitered on March 2013. I would be doing interiors and actually move only in Oct 2013.
        Till then I am in rented flat in the same city.
        I am paying EMI since Dec 2012.
        My questions :
        a) Till which date my flat be called as under construction ? March 2013 or July 2013 or Oct 2013 ?
        b)If it is assumed self occupied only from July 2013 , will I be able to claim Interest deduction from April 13 or only from July 13 .
        I am asking above two questions keeping in mind HRA component which I am getting tax benefit on.

        1. Till the time your get possession letter from builder !

  73. Abdul Rehman says:


    I bought a 2 BHK in Noida (Crossing Republic) under construction house. Possession was to be made in Dec 2013 but now without any notice to me they have extended the possession date by a year and now it will in Dec 2014. I am not interested keeping this property anymore and want to resell it.

    Is it possible to resell it?
    I have a loan of 18 Lacs from corporation Bank?
    I started my loan EMI in Jan 2012.

    Please guide me.

    1. Why not , you should be able to resell it to anyone you want and who is ready to buy

  74. Raj says:

    Dear Mohit,
    I have similar issue. My Home Loan was approved in Oct 2009. Property was under construction property and loan was to be disbursed as per construction linked plan. 1st disbursement happened in Dec 2009.
    I took the option to pay only interest till Dec 2011. Question 1 )Hope this interest amount qualifies as pre-emi interest.
    My EMIs started on the amount disbursed from Jan 2012.
    I shall be getting the possession of my flat in Sep 2013 (Apprx but less than 4 yrs from home loan sanction).
    Question 2) Can I claim 1.5 lac Tax benefit on interest in current FY 13-14?
    Question 3) Can I keep claiming 1.5 lac Tax benefit for the interest I have paid in past?
    Question 4) Can pre-emi interest paid in FY 09-10 be also claimed somehow?

    1. 2. Yes
      3. Yes, but in 5 installments
      4. Yes, but in 5 installments

  75. Karun says:


    I will getting possession of my new house in JUly 2013. I will be moving in there for three months and then move out for personal reasons. House will be vacant then. How can claim tax? as self occupied(1.5L) or full interest(excluding nominal rent). Interest will be more than 1.5L for sure. Or can I calim on prorata basis? Pleasse let me know.


    1. Self Possession doesnt mean that you have to be physically there. It means you have got the possession and its not on rent . So you can still claim upto 1.5 lacs

  76. Ganpat Bagal says:

    Hi Manish,

    I have 1 BHK falt in Hadapsar, Pune, which is rented out for Rs. 7000/- Per month.
    Due to my daughter school, I stay in rented house in Wagholi, Pune and pay rent 13500/- per months. My query is that, can I claim HRA for Rs. 13500/- per months and also get begefit on income tax of the home loan interest which is I am paying near about 10,000/- per months. How should I declare my income tax for this? Please suggets. Thanks in advance.

    1. Yes you can do that , but the rent of 7000 will be your income also

  77. umesh says:

    which bank provides best home loan without oc

    1. Wrong question .. There is nothing like Best home loan

  78. umesh says:

    which bank provides home loan without oc[Occupancy Certificate].Please give me bank names

  79. Venkatesh says:

    If a loan is taken from family or friends, what will be the documents required to claim benefit of interest amount?


    1. he agreement letter for loan . Just make the documents with help of a lawyer

  80. Amit says:

    I have taken 1 home loan and paid it full in Jan 2013. Now I have taken a Flat which will be handover to me in August 2013.

    I am taking loan of Rs 21 Lac out of 30 Lac with co-applicant is my Wife as well.
    For me its 2nd home loan, 1st is closed and for my Wife this is 1st home loan. What will be the tax benefit to me & my wife.

    As per bank We need to do ECS from 1 account.
    # If my wife pay the full amount can i get tax exemption ?
    # If ECS is from my wife account & I deposit my part in her account then can i get tax exemption ? or we need to open a Joint Account
    # Do I need to pay any wealth tax on 1 property
    # Do I need to show 1 of the property as rented out.

    1. You will be able to claim tax only on the amount which comes out of your pocket, Just because you transfer the amount to your wife, it does not mean that she will get the tax benefit .

      Yes, you need to pay the wealth tax on 1st property , because the second house is also on your name , if its fully on your wife name, then you dont need to pay

      Yes, you can do that !

      1. Amit says:

        How should i split this loan amount (EMI) among myself and my wife, so that i will get amximum benefit

        The loan Amount is 21 Lac, For me its 2nd home loan, 1st is closed and for my Wife this is 1st home loan.

        My Annual Income – 6.5Lac
        Wife Annual Income – 3.6Lac

        1. That would need some working and analysis, planning to do a post on this sometime, have you done some calculations on your side ?

          1. Amit says:

            I am thinking of Ratio of 50(me):50(wife) or 60(me):40(wife)
            but not able to decide which is more beneficial. Also my wife salary I expect a growth of 10% every year.

            1. Dont think too much .. any of these is fine !

  81. deep says:

    hi manish , I am in a dilemma , I showed my house possession in last years (2011-2012) declaration ,possession date : march , and claimed tax benefit on interest component also claimed tax benefit on HRA for the whole financial year 2011-2012 ( AS my builder said I will be getting that by that time , but it actually did not happen ) . But actually I got my possession in nov 2012 . So am worried what should I do now , can I show my actual possession now and also claim tax benefit on HRA till nov 2012 . Am really worried about this, as it can be considered as fraud as well . And if I dont show my possession now then I wont be able to claim HRA benefit till nov 2012 .I am a salaried employee . How can I correct my mistake now ? Your advise is highly appreciated .

    Thanks in advance

    1. You will have to pay the tax as per the correct situation .. check how much more tax you need to pay as per truth and then pay it online to tax department .. while you file for taxation , correct these mistakes there, How are you filing you returns !

      1. deep says:

        I pay it offline by submitting form 16 by hand , cant I do like I dont claim HRA for this financial year and continue showing the possession date as march 2012 ?

        1. Will it be correct information or not. later if there is any issue and there is any scrutiny, will you be able to explain things to some tax officer ?

          1. deep says:

            what are the chances of being scrutinized if salary is under 10 lakhs ?

            1. Dear Deep, please recalculate your tax liability for FY 2011-2012. Pay the due tax & relax. Claim the actual situation for current FY. That’s the right way to save you from your future pain. In case you want to play with fire by not reporting your situation so be it. It’s your choice we can not comment & help either.



  82. Jibin says:

    Hi Manish,

    The information you have provided is very informative. Need help regarding the below.

    I am planning to construct a house on a property owned by my father in my home-town in Kerala by taking a home loan from a bank. I will be the applicant and my father the co-applicant and the EMI will be totally paid by me as he is currently not earning. So, my question is can I claim the benefits of 80c or is it I should be a owner or co-owner of the property in order to claim benefits. And what proofs would I be needing to submit to claim the benefits once the construction is finished and occupied.


    1. You will be required to have the land in your name , only then you will be able to claim the 80C and 24d benefits

      1. Jibin says:

        Thanks for the reply Manish. But need a couple more clarifications.
        1. Will I be eligible if I start the construction now as the loan is already sanctioned and then change it into my name in the due course of time (If not all the documents have to be changed and I need to repeat the whole process to be .
        2. And also can I claim the whole EMI amount for tax deduction if I am a co-owner of the property or is it I should be the sole owner to claim the whole amount.
        3. Is it that I can claim for tax deductions only after the construction and possession of the same. If it is so how do I prove the possession and how to claim the EMI’s which were paid pre-possession.

        1. Your query is not a normal one .. I would like you to start a thread on our forum – https://www.jagoinvestor.com/forum/ . I can assure you , that answers will be on your way 🙂

  83. chanchal kalra says:

    I have a property co-owned with my brother.Entire EMI is paid from his account but im the co-owner for the house as well as the co-applicant for the loan.

    Please suggest can i get tax exemptions and under which law Need to prove to my companies F&A.

    thanx and regards

    1. You cant get tax exemption if you are not paying EMI from your end !

  84. Bhomeshwar Shah says:

    I have a plot of 100 square yard. I have taken a loan of Rs. 4/-Lacs in the year 2005 for constructing the two rooms and started living and getting the benefit of interest u/s 24 and principal u/s 80C since then. I have also taken a second loan of Rs. 5/- lacs in 2012 for extension of this self occupied house. Weather I can avail tax benefit on both the loans for payment of interest u/s 24 and principal u/s 80 C.

    1. No , you will get only the exemption on interest part 🙂

  85. Shamsher says:

    Hi Manish,
    I came to know that Possession Letter from Builder or through self declaration from the employee has been made mandatory as per IT circular no 8/2012, dated 5th October 2012.
    Can electricity bill/water bill be submitted in place of Possession letter?
    We did not get any possession letter from the builder. We have sale deed, EC with us
    and electricity and water bill are on my name now.

    1. But you need a document to show that you are in possession of flat, I think you will have to arrange for it if you want to claim tax deductions !

      1. Shamsher says:

        Thanks for the information,

        Is there any website from where i can download the possession letter template?


        1. Not aware about it !

  86. Bhomeshwar Shah says:

    I have a plot of 100 square yard. I have taken a loan of Rs. 4/-Lacs in the year 2005 for constructing the two rooms and started living and getting the benefit of interest and principal since then. I have also taken a second loan of Rs. 5/- lacs in 2012 for extension of this self occupied house. Weather I can avail tax benefit on both the loans for payment of interest and principal.

    1. You can claim tax benefit of interest on the second loan .

  87. Harnish says:

    Hi Manish,

    I bought a residential house in Aug, 2008 for Rs. 6,11,000/- and sold the same on 29th July, 2012 for Rs. 17,59,000/-. My LTCG is coming to approx Rs. 6.5 lacs after indexation. I bought a new residential house jointly with my brother in law on 15th Sep, 2012 for Rs. 20 Lacs. We have paid Rs. 3 lacs by cheque (All the payment has been made from by bank account) and have taken Rs. 17 lacs as housing loan. Can you please throw some light on my capital gain liability? Income tax authority will allow entire 20 lacs as investment against capital gain or will allow only 3 lacs paid by me, as investment against capital gain?

    Please let me know as in case if there is any capital gain then I have to invest before 30th January, 2013. Just few days left for me.

    Please let me know if you require any other details of the same.


    1. Obviosuly only 3 lacs . .because that the only money you have used from your pocket . rest all is loan !

  88. deepak babbar says:

    hi i took home loan of 27 lacs before posession of a flat name on my wife and me.
    i paid 25000 as an interest for 14 months that is 350000 in total. i sold that flat befoe taking posession and repaid the loan amount in 14 months. i also had an insuance cover on that around 20000 per year for this loan.. is there any thing which i can claim for deduction in income tax in cuming financial year.. deepak babbar

    1. No, you cant .. even your tax claimed till date should be revered IDEALLY legally !

  89. Manish says:

    Corrected the question
    Hi Manish,
    I bought one flat in which me and my wife have taken a joint loan but in the property i am the only owner.
    Moreover we use to pay the EMI jointly.
    But My wife is not able to show tax benefit as she did not owned any asset.
    Kindly Suggest what is the solution and also the procedure to do it.

    1. There is no solution other than making her the owner for 50% part ! , once thats done, she can also claim the tax benefits !

  90. Ram says:

    Dear Manish,
    I had a query.
    I had taken a personal Loan for construction/extension of House in my home town.The House is in the name of my mother.Now I am paying the installments for that,Can I claim Interest payment out of my installment for the year to the tune upto 30K
    I appreciate ur earliest response…
    Thanks & Regards

  91. Deepak Jain says:

    I have taken loan from bank and mortgage property , and for this I have paid Stamp Duty of 22000/- , can this stamp duty eligible for deduction under 80 c of income tax

    Deepak Jain

  92. Ameya says:

    Hello Manish,

    Pl. guide me in below situation:
    Property Omner – My Mother Only
    Loan Borrowers – I am primary applicant with my mother as Co Applicant
    EMI is paid by me.

    How can my mother claim income tax benefits?

    1. She cant , because she is not paying the EMI ! ..

      1. Anoob Sadasivan says:

        Hi ,
        I have question , I have been paying EMI towards my flat under construction for last 2 years. Finally I got possession of my flat on 01- December 2012.
        Up to 30-Nov-2012 i was staying in rented house.
        Interest component of my housing loan is more than 1.5L.

        Can i claim both HRA up to Nov -2012 and Interest, principle components of
        1.5 L(under 24) , 1L (under 80c) for the FY 2012-2013?

        Thanks in Advance

        1. You should be able to claim the HRA only for the time you lived for rent and only the interest component for the next 3 months ..

  93. sudhir says:

    Dear Manish & Ashish,

    First of all thanks for clarifying the things in easiest manner.

    I request you to throw some light on below query,
    I want to purchase home on joint account along with wife with total loan amount of 64 lakhs,
    now my question is
    “How should i split this loan amount (EMI) among myself and my wife, so that i will get amximum benefit”

    Please Note – My salary is 1.10 lakh pm and my wife salary is 42k pm.

    Thanks & regards,

    1. sudhir says:

      Adding to this, our total EMI is 65000 pm including Principal & Interest. Fixed for next 10 years

    2. Splitting it 50% – 50% will not serve you , because thats not the optimal one . I would say better do it 70:30 or 60:40 !

      1. sudhir says:

        Thanks Manish, for your prompt response.
        One more thing I request you to clarify if possible, someone told me that if I am buying property of suppose 1 cr and providing intial payment/our part around 30 lakhs. Than this 30lakhs source of income will decide the ratio for the 70Lakhs loan amount share/laon ratio. Is this true

  94. Pankaj patil says:

    How time we get the home loan in life ?

    1. Your question not clear to me ?

  95. ST says:

    i have booked flat of Rs 1020000 and i have gave 10% token amt(down payment) and the builder scheme is customer need to give 35% amt included down payment and reamining 75% builder will finance rate of interest as per 3% for next 5yr so i think it is type of loan builder are giving, so my Question is can i claim for tax benifit on this flat amount . please send me Answer also to my email id slltandel@gmail.com,so i can search my ans easily

    1. ST says:

      and it is under construction building

    2. No , you can not, because the loan is not there ..

  96. paresh says:

    found your site with really helpfull information,i have one doubt.
    I have availed a housing loan of 40 lakh for 20 years but possession is from july/aug 2013.i have been given 12 months of morotorium period and 19 years of loan as the disburment is construction based.i wanted to know how
    1.Banks calculate the interest rate in the morotorium perios (simple/cumulative) -for eg if i have a disbusrment of 20 lakh in 1st month what will be the interest i have to pay next month 2000(assuming 10 % interser rate simple calculation or ~18000( assuming only interest payment for 20 years loan ).

    1. Paresh

      Lets start a thread to discuss your case on our forum – https://www.jagoinvestor.com/forum/

      1. pradeep chothave says:

        Just want to know that can we get tax benefit for under construction flat if we have taken loan from friend or parents.

        1. Yes, you can get that for the interest part

  97. Robert says:

    Hi Manish, i have gone through your replies on your support for common people queries and was really very impressing.
    I have a couple queries, i have a plot in chennai i want to go for a home loan for constructing a house.
    i am planning to build a house by obtaining a plan from an engineer and to build the house of with local masons who may not be like registered builers.
    hence on this how to approach for home loan and who will give the pocession certificate.for claiming tax benefit.

    1. That really calls for some discussion , can you open a thread on our forum – https://www.jagoinvestor.com/forum/ . You will get best advice !

  98. sunil says:

    Hi Manish,

    I have booked a flat in noida in feb’2010 and have taken loan of 30Lacs from LIC Housing, but builder has delayed the possession from june’2013 to dec’2014, I am paying full emi on home loan, so my question here is can I claim tax benefit on principal part of pre emi, I have been told by some people that we can claim rebate under 80c because of some ambiguity in tax laws but need to convince tax dept. if some inquiry is made by them.

    My office is not willing to approve it for under construction propert but tax consultant is willing to do that.


    1. No its not possible to claim tax benefit if its not in possession , thats what IT rules says. you need to have a possession certificate !

  99. Prashant says:

    I have some queries regarding tax benifits.
    1. I have purchased a flat of which I will take possession in Feb 2013. I am paying Rs.30000/- EMI per month. Can I claim full tax benifit of Rs.1.5 lacs for FY2012-13? OR will the tax benifit be for only month of Feb 2013 on pro-rata basis?

    2. If I make my spouse equal partner in homeloan amount, how much tax benifit will she get? entire 1.5 lacs or 75k?

    1. 1. Pro-rata

      2. She will also get full 1.5 lacs benefit

  100. Balaji Sriram says:


    Can i take a loan from a friend, if yes, what could be the agreement that needs to be parted with. Thanx

    1. Yes you can take it from a friend and the agreement depends on you , just make sure its realistic !

  101. Kiran says:

    I have purchased under contruction flat with loan and I will get the possession by Dec 2012. My EMI is already started from April 2012.
    My question is, Will the 80C and 24B benifit calculated after date of possession or I can clame the benifits for entire FY(ie from April 2012)?

    1. You can claim it for entire year .. mostly

      1. Kiran says:

        Thanks for reply, there small correction in the question.
        Will the 80C and 24B benifit calculated after date of possession or I can clame the benifits for entire FY(ie from April 2012) and within same FY?
        I come to know from other source that I cannot clame benefit on the Interest that has been paid before possession within same FY. I will have to claim the interest benefit in 5 equal installments starting from the FY in which the construction of the house ends and I get its possession. The source is “https://www.raagvamdatt.com/income-tax-it-benefits-of-a-home-loan-housing-loan-mortgage”. Is it true?

        1. Hmm.. I think you should then discuss it on our forum – https://www.jagoinvestor.com/forum/

  102. Prateek Jain says:

    Dear Manish Sir,

    I received possession of my house on 15th March 2012. I took a loan of 30 lakhs and I have been paying EMI of Rs.35,000 since Jul-2011. According to approximate calculation, I have paid Rs.40,000 as principal and Rs. 2,40,000 as interest (if I consider payments from Jul-11 to Feb-12). As I got possession in the middle of the last month in Financial year 11-12, how can I claim tax deduction on the interest paid for 11-12? I have already filed the income tax for 2011-12, can I file the tax again and claim deduction before 31 August 2012?


    1. You can claim that in next 5 yrs , each year 20% of the interest paid till date, but this will be part of the 1.5 lacs limit in a year . If you are already paying more than 1.5 lacs in a year, its a waste for you then

  103. Prashanth Puthran says:

    Dear Sir,
    Due to some technical problems in my purchased plot my area of the house was sanctioned for minimum by the sanctioning authority.using the same plan i am physically constructing a bigger house than the sanctioned one.How is it possible for me to avail maximum loan amount on the physically constructed house but not on the approved plan approved by the authority.Is there any additional documents to be produced by me.

    1. I think you should discuss it at our forum – https://www.jagoinvestor.com/forum

  104. Rajeev Palkar says:

    Manish, Thank you for clarifying.

    Looking at the previous replies, was reasonably sure that will hear back in a day- Thanks for your prompt response- you have made my day, month & year!! 🙂

    Best regards,

  105. Rajeev Palkar says:

    Dear Manish,
    Was aware of 80c, but not about details of 24- And wanted to seek your advice please-

    I have bought a ready house on loan and am repaying the bank and continue to live with my parents, leaving the bought house vacant.

    I have been using 1.5lac limit (like occupied property for the interest portion), but wanted to check if can use section 24 to add-up notional rent – Interest paid, to report LOSS on this head. Am sure this difference is much higher than the 1.5lac limit that am currently using. Please advice.

    Can probably claim HRA, but am not worried about it at the moment.
    Thanks in advance for your help!!

    Best Regards,

    1. Rajeev

      Yes you can show that the house is no rent (which will be your income) and then avail unlimited deduction under 24 b

  106. Michelle says:

    My husband and I are planning to purchase an under-construction flat now for investment purposes that will be ready for possession by October 2014. We plan to give this house on rent even though we are currently staying in a rented apmt. We were planning to take a joint loan from the bank as 50-50 co-borrowers since we will be co-owners and get equal tax benefit. However thanks to the useful information in your posts I realized that we can claim tax benefit even for interest paid to family/friends.

    So I have a few questions:
    1. If we intend to borrow 25 lakhs from a family member/s, how do we calculate the Principal and interest due to them assuming a 9% or 10% interest rate? How do we show the same in the agreement which is required to be made in order to claim tax benefit?

    2. Since we will get possession in Oct 2014 and hence can claim tax benefit only in FY14 for the Interest paid, when should we start repaying the Principal + Interest to family member/s to maximize tax benefit.

    3. My husband has another flat in his name which has been given out for rent in the same city and for which he is paying EMI to HDFC @Rs.7500 pm. Is it preferable to pay the remaining Rs. 4.5 lakhs to HDFC and close the home loan of the previous house and increase loan amount from family member/s to Rs. 30 lakhs for the proposed under-construction property?

    Thank you in advance for your help!

    1. Michelle

      1. This article contains few downloadable files (excel) https://www.jagoinvestor.com/2011/04/loan-amortization-emi.html . Download it first . You can find out on net how to calculate the interst part

      2. If you can repay it later after getting the possession , it would be great .

      3. If the loan is at its last stages , then better pay it off normally each month, anyways the interest part would be lower, this is purely from mathematical point, but from emotional point , getting off a burden helps !


  107. Surendran says:

    Dear Manish,

    Thanks for the entire chain of responses. very informative. I have a question please.

    I booked a second flat in Nov 2009. Paid few lakhs of rupees in principal and PEMI to bank. Got possession in Aug 2010. Sold the flat in Oct 2010 due fianancial stress, with very good profit. understand short term capital gain need to pay tax. Is there any tax benefit for interest paid during filing of tax return before 31st July 2012? is there any tax exemption for the maintenance charges paid to builder in this case?

    Best Regards

    1. Surendran

      I dont you will be able to get any tax benefit for the interest part before getting possession before you dont have the house itself now !

      1. Surendran says:

        Thanks Manish. One error happened. possession in Aug 2011. Paid EMI for 2 months. Sold in Oct 2011.

  108. Deepak mulchandani says:

    Hi Manish/Ashal,

    I have one query my late grandmother has given one plot as a will to my father, if my retired father sells the plot and give money as a loan with some interest to me and i buy a flat on my name with this money as a loan + downpayment from my pocket. So in this what will be the property & income tax implications to me(buys flat) and my father(he sells plot)?

    whether my father is eligible to give this money as a loan to me ?(as he has not earned this money himself)
    Can i claim tax benefit on interest part upto 1.5L ?

    Upto What amount a son can be taken as a gift from parents?

    which option will be better for me … to take money from my father as a loan or as a gift?

    Thanks & Regards
    deepak mulchandani

    1. Deepak

      You can take the loan from your father as your mentioned , you can claim all the amount paid as interest under tax deductions . no worry on that . As your father has got it , he has all the rights on that .


  109. MangoMan says:

    Hi Manish,

    Due to some unavoidable reasons, my Form 16 doesn’t contain the deductions for interest and principal on my home loan.

    My question is, can i still claim the benefits while filing my tax return ?


    1. Obviously

      You can claim it later .

  110. Ankur says:

    Dear Manish/Akash

    I purchased a house in june2010. I took some money from my father and then some home loan from a bank.

    I am paying back the bank loan on EMI basis and claiming interest and principal both benefits for tax purpose.

    Now Nov2012 onwards my interest through bank will go below 1.5 lac (say it will become 1.3lac).

    1. Can I claim 1.5 lac deduction showing that 1.3 from bank and 20thousand interest for the money I borrowed from my father.

    Please note : My father just gave me money in cash but never showed it as loan or gift or anything.

    2. How can I show that the money he gave me is loan with say X percent interest?

    Also note that I am not paying regular money to my father, I will pay him in Oct2012 all the principal money back.

    1. Ankur

      1. Yes you can show 20k paying back to father and claim interest deduction , your father income will be 20k in that case 🙂 . which is non taxable , make a small loan agreement .

      2. Make a small contract , meet a lawyer

  111. Joy says:

    More over if I sell now, i.e.. in 4th year, and close the loan A/C by sell proceeds, will they still reverse the principal claim benifits ? (asking after interpreting from above question’s ans to Subramanian)

    1. Joy

      Nothing will happen automatically , as per law you are suppose to declare it ,but if you dont then it will not happen automatically

      1. Joy says:

        hi Manish, thanks for the reply.. Yes , I will have to declare the sell of house.. because IT department will otherwise come to know about it through other sources.. Could you please address my question No 1 above,., It will help me in deciding if I should wait till 1st April (5th financial year from the year of purchase) or wait till 1 July (i.e. 5 calander years from purchase date)..
        And the answer to Question No 2 will help me in deciding if, I should sell house now (after completing 4 years) , (e.g. if the gain now is high, compared to reversal deduction then I should go ahead now to sell.)

        1. Joy

          A better thing would be to start a thread on the forum because it requires some discussion : https://www.jagoinvestor.com/forum

  112. Joy says:

    Dear Sirs
    I am a salaried person. I have bought the house in June 2008. For all these 4 years, out of my claim of 100000 in 80C, almost 70K were going through other means like PF, ELSS, LIC etc .. and 30K were going through the Loan Principal payment, though the payment towards principal would have been around 2L per year, but for income tax purpose average 30K would be considered..
    Based on above data , my quersion is ,
    1) To save revarsal of principal claim , what is the earliest that I can sell my house.. would they consider end of March 2013 i.e. April 2013 as the completion of period of 5 financial years i.e. 08-09,09-10,10-11,11-12,12-13 … or they will consider the exact 5 years from date of purchase. i.e. 5th June 2013.

    2) In case if I sell now .. i.e. after completing 4 years and before 5 year, what is the exact amount that would be reversed i.e. 30000 x 4 = 120000 for all these 4 years.. assuming 30000 each year gone from principal payment towards tax saving.. or they will reverse flat 100000.

    Hope my questions are clear.. I have tried to explain them with examples.. Please let me know if anything not clear.. I will provide more details..

  113. Subramanian says:

    Thanks Manish.

  114. Subramanian says:

    Hi Manish,

    Good to see your continuous support on replies in several years.

    Here is my case:
    I have bought a house in Jul-07 for 9Lakh and got HDFC loan for 7Lakh.
    I have (literally sold the house) given power of attorney to other guy and got the money and settled the HDFC home loan in Feb-12

    So does this come under selling the house before 5years holding period or ?
    Little confused on Capital gain stuff and Holding period for my case. Can you please help here?

    Not sure if that guy to whom I have given power-of-attorney has sold the house yet or not. If not done before Jul-12 can I consider that I have completed 5years? even after pre-closing the HDFC home loan?

    1. I dont think this can be considered as SALE anyways .. another point is that for taxation point of view (LTCG) ,, the time frame is above 3 yrs , not 5 yrs .. why did you mention 5 yrs ?

      1. Subramanian says:

        The reason I was referring to 5yrs is because of the reversal of principle amount I claimed tax exemption under 80C.

        So, there is no issue even after closing the HDFC loan. (in terms of reversal)

        1. If you close the loan by repayment , then there is no reversal

  115. amit says:

    I took home loan in October 2010. Now I want to sell the property and buy a new one by taking a fresh loan. Do I still need to pay the tax as the loan is under 5 years? Is there a provision that I can continue the same loan for another property or renew the loan?

    1. Amit

      As per law , the long term capital gains apply when you sell a house after 3 yrs , so in your case the profit will be added to your income and taxed at applicable slab rates .

  116. Aldrin says:

    Hi Manish,

    I have a doubt here. I have taken 25 lacks loan for house construction and the construction is 80% complete. My EMIs will start from april 2013 (because of the moratorium period) and loan tenure is 240 months for around 26k per month. Can i avail the tax exemption for the Financial year 2012-2013 ??? and for Principal or Interest amount ???
    Please do help me in this..

    1. Where did you pay any EMI in past ? It has not yet started , right ?

      As you saw in article, you can claim only interest part and that too for last 5 yrs , but the total exemption for a year would be total 1.5 lacs only , which I think you will cross anyways even if you dont count the pass one !



    Please advise how we can claim the interest of LOAN taken from other. under section 24, what is the procedure for claiming.

    1. Make a written document saying that you have taken a loan from someone and repaying it !

  118. sumit says:

    I have only one house which is let out. Can I claim interest deduction more than Rs. 1,50,000/-

    1. I dont think so ..

      1. sumit says:

        Why? is it specifically written in sec 24 of IT act?

        1. Sumit

          You can raise this on our forum and see what others have to say . I am not 100% sure on this now : https://www.jagoinvestor.com/forum

  119. Rajesh says:

    Is there a limit to Deduction of ‘Interest payable of home loan’ from Salary after deducting the let off/rental value? I assume there is cap of 1.5 lacs max as deduction of home loan interest from salary for Income tax computation. But for rented property there is no upper limit of 1.5 Lacs?
    Interest payable on Housing loan for let off property can be claimed as deduction without any upper limit. Is it correct?
    thanks in advance

    1. Rajesh says:

      I am planning to take HRA rebate too as this property is far off from my work place. Trust i can avail exemption from HRA and home loan interest both at the same time.

      1. Rajesh

        Yes it its too far , you should be able to get it

    2. It should be a second home also

  120. Mysterio says:

    My home loan begun in March 2008. I took the letter of possession in April 2008 and have been claiming tax benefit under 80C and 24 b since then.

    It is May 2012 and I want to sell the flat now and buy a new one; a cheaper (smaller) one so that I can pay off my home alone using the price escalation of my existing flat.

    I understand that whatever I have claimed in 80C till now will be added to my income. However, I need clarification. Say, if I declared 50,000 every year under 80C for principal amount of home loan for last four years, will 2,00,000 be added as is to my income in the year I sell the flat?

    Also, if I sell the flat for 70 lac out of which I pay off 30 lac of home loan, what will be my tax liability given the fact that I reinvest 40 lac in the new property immediately?

    Thank you …

    1. Yes .. Rs 2,00,000 will be added as income , but now this is on you , if you want to show it or not , legally you should show it

      Also in case you sell your house at 70 lacs and use all 70 lacs to pay off the loan of buy another property, then there is no tax to be paid !

  121. Proloy says:

    I plan to buy a home. I’ll need to borrow about 10L from my father for this, apart from taking a home loan from a bank. It’ll be my first property. My question is: Can I show the property as let out to my father, with the rent he’ll be paying to me roughly matching the interest that I’d be obliged to pay him for the amount that I’ll be borrowing from him…? I generally plan to reside in the same house. But the thing is, since the property is very far from my current place of work (20+ kms), I might also look at renting out a small studio at a rent of 3-5K pm closer to my office. This’ll be kind of back up shelter for me for the days I’m late at office, and can’t travel that far. If I let it out to my father, can I claim tax deduction on the full amount of interest to the bank…? And am I forced to rent out another property to let out my own one to my father? Or can I legally stay on with him as a visitor, so long as I show the rent he’s paying me as part of my income…? Mind you, the rent he’ll be paying me might offset the interest that I’d be paying him — so effectively there may not be any net transfer between us. The aim of this arrangement is to get make the entire interest payment to bank (which might come to about 5-6 L per annum) as tax deductible. If the law requires that I take a separate residence on rent for myself to be able to let out my own property, I’m willing to do that, because it’ll even help me, since commuting from that place everyday will be a hassle. I may not claim any HRA rebate, because my annual rent paid will anyway fall under the threshold (less than 10% of basic salary), if I rent out a studio or small 1BHK. Will appreciate if Ashal or someone else could quote the relevant section of the law for this case. I’m assuming that letting out to my father is allowable in law (my parents will actually be staying there).

    1. I am not understanding how you want to show it as rent to your father , while you can do it , how is it helping you or your father ? The first point is you will not be able to claim the deduction if its not self-occupied, so you cant claim tax deduction and also show that its on rent ! .

      1. Proloy says:

        You misunderstood the question. I said I’d want to let it out to my father. Therefore, I’d be the recipient of the rent. From him. That rent would be added to my own income. This would allow me to get the entire interest amount on my bank loan as tax deductible, which’d otherwise have been capped at 1.5L. Supposing I pay 6L annually as interest on a 60L loan, by this arrangement I’d get that entire amount as tax deductible. Let’s assume that my father pays me 15K per month, which’d come to 1.8L per annum. After 30% standard deduction, I’d have to pay income tax on the remaining amount, that is 1.2L. However, I’d also be paying interest to my father for the 12L that I borrowed from him, which comes to roughly 1.2L per annum. Therefore, I’d have virtually no extra tax liability for my rental income, but I’d still get the benefit of having the entire 6L interest that I pay to the bank as tax-deductible, instead of just 1.5L being tax deductible, if the flat were occupied by me.

        Thank you for your reply, anyway.

        1. Muthu Krishnan V says:

          if loss from house property is more than 2.5L, the return will be automatically picked up for IT scrutiny. ensure that your accounts and returns are good to pass scrutiny

          1. Muthu

            I never knew that. . is that the general trend !

            1. Muthu Krishnan V says:




              There are three ways that a return can be picked up for scrutiny that i know off – CASS (computer assisted), AIR (annual information report) and manual.

              In CASS, they change the norms for selection every year. couple of years back, loss above 2.5L from house property was being picked up. unfortunately, i was one of them. after the experience, i closed one of the two home loans that i had :).

            2. OK , thats a good info .. will have to study it more !

        2. I doubt if this is possible (but not sure about it) .. The unlimited interest is only on the second home (which runs parallel) , so i dont see if you will really achieve anything by letting it to your father .

          I think this should be discussed at length at our forum : https://www.jagoinvestor.com/forum/

  122. abhishek says:

    my father purchase house from vastu vihar in deed he is landowner and builder is vastu vihar.now my father is selling top floor to me can i get home loan on that

    1. Yes .. definately .. you can get home loan

  123. Bala says:

    I have a property under construction which will be completing by sep2012. Also I’m planning to pay the principle with the pre emi amount from apr12 to sep 12. Am I eligible for tax deductions for both the pre emi interest and principle paid during the months of apr12 to sep12 along with the regular emi & principle(oct12 to mar12) paid for the financial year 2012-13?

    1. Bala

      Yes .. you should be able to claim it as you will occupie the house in the same year

  124. sunny balwani says:

    Thanks Ashal

  125. sunny balwani says:

    Thanks a Lot Ashal for this excellent solution. I will do the same. but if in next one year my sister gets married and after that if she wants some amount of given money back ,so can i or my father can pay her lets say 1 lac per annum to my sister as a gift. Please confirm the same.


    1. ASHAL JAUHARI says:

      Dear Sunny, Yes is the answer. You or your father may give any amount of gift to her as per choice of yours’.



  126. sunny balwani says:

    Thanks Ashal and Manish for valuable suggestions, My father is retired and has spent his savings on our studies. So, only option is to take money from my sister.

    1. ASHAL JAUHARI says:

      Dear Sunny, a workable solution. Please ask your sister to gift the amount to your father. Once the money is with your father, take it on a loan from him & pay interest rate @ 10-12% yly. As your father is retired, I assume he is in zero tax slab & a Sr. Citizen. so the interest paid by you to him ‘ll not get impacted by Tax.



  127. rishab says:

    hi manish,

    i had been to almost all the above post but still had one unanswered question:-

    If i am getting possession of my flat in July’12, i will be claiming principal as well as interest component in fy12-13 and i will be occupying house after possession i.e. august onwards.
    now my question is regarding hra exemption, can i claim exemption for the full year or till august only i.e. for 4 months, moreover if i am claiming hra for 4 months, can i claim interest part fully for 12 months or not?

    1. ASHAL JAUHARI says:

      Dear Rishab, for your given query, as you w’ll be on rent for April to July period only, the HRA ‘ll benefit ‘ll be till that time only. Interest benefit ‘ll be available for full 12 months i.e. april 2012 to march 2013.



    2. Rishab

      There is no relation betweeen HRA and your house .. If you can show the rent reciepts for all the months , you can claim the HRA .

  128. sunny balwani says:

    Dear Manish,

    Thanks for providing such valuable information. I regularly read your post and gaining lots of financial knowledge. Request you to provide your suggestions on my below queries:

    1. I am planning to buy a 1BHK flat around 24Lakhs, for that i am thinking paying 16lakhs downpayment out of which 8laksh will be from my pocket and 8Lakhs i will be taking from my real sister (unmarried,IT Professional) and rest of 8lakhs i will take home loan. So, i want to know whther my sister can give me money at 0% interest rate or should i take at around 6% interest rate(which one will be better for me), so that i can claim tax rebate under section 24, but this will put her in higher tax bracket, so this interest income to her will be taxable. What is the legal process of taking this money from sister and paying her that money back?

    2. My father has plot at my howetown on his name, what will be the tax implications , if i spent money on constructing house on this plot? should i spent money for this from my pocket or should i take home construction loan for this? which opton will be better for me ? Please suggest.

    Thanks & Regards,
    Sunny Balwani

    1. Sunny

      1. You can take a loan from here .. just make a formal document which says that you are taking loan at X% of interest . from documentation point this should be ok , but better catch a real estate lawyer for details

      2. You cant get tax exemptions as the plot is not on your name

    2. ASHAL JAUHARI says:

      Dear Sunny, if your Own income is in higher Tax slab than your Sister, then only it makes sense to take loan & paying interest to your sister. By the way, why are you not taking loan from your Father for this house? If your father is retired & in zero or lower tax slab, you may (actually you should) take loan from him.

      2. As the plot in question is not in your name, you can’t claim Tax benefit for the home loan taken for construction on this plot. Yes You may become a co-borrower for the home loan along with your father for the home loan taken for construction on this plot.



  129. vani says:

    Thanks for the information both Manish and Ashal

  130. Parry says:


    As we cannot claim the interest portion under section 24 and as there is a limit on 1.5 lacs too, i’ve been advised that during filing of income tax return one can claim refund under loss of income against house or property. So what are the repercussions of claiming the interest portion here. There is catch though- one has to continue the same every yr and not decide to claim under section 24 in between.

    Plz validate this. Also, what are the CBDT guidelines and restrictions.

    1. ASHAL JAUHARI says:

      Dear Parry, I’m unable to understand your query? can you elaborate it? The house in question is under your possession or not? If it’s under your possession & self occupied, you may claim a max. interest of 1.5L Rs. under section 24b.

      If it’s on rent, then after showing the rental income, you may claim full interest even above 1.5L Rs. whatever you are paying under section 24b but in case, the house is not under your possession & still under construction, you can’t claim interest benefit.



  131. kahnu says:

    My wife is a bank employee. her bank offers her a home loan for 13 lacs with a very low interest but as per the situation and market condition its hard to get a land with that amount. If I will go for a loan then will bank allow me for two loans on same property?

    1. Kahnu

      Thats totally on the bank if they allow or not .. this question should be asked to bank directly .

    2. ASHAL JAUHARI says:

      Dear Kahnu, The bank may allow the higher loan amount at regular ROI for you & lower ROI for your wife being the employee of the bank. Please check with the bank. By the way, please do note – in case of lower ROI than market rate, there ‘ll be a perquisite value addition in your wife’s income for the difference of Market rate to the rate charged from your wife.



  132. Deepak says:

    Hi my house is in under construction stage and will be ready for possession from Dec 2012, So can I claim both HRA and housing loan benifits(150000+principal amount) in this financial year? Please advise.

    1. Deepak

      You can only claim HRA as of now .. you can claim Tax benefit on sec 80C and interest part only on possession !

    2. ASHAL JAUHARI says:

      Dear Deepak, Yes you may claim both benefits. Principal amount is available even today for tax benefit. Interest benefit ‘ll be available for home loan once, the possession is there but for all the interest paid in the FY even from April to Dec.



  133. Niharika C says:


    Nice article. I wanted to be knowing that my husband and me have taken a home loan amounting to an interest of 30000 p.m. (approx.) Since the limit on interest of Home Loan is only 1,50,000 p.a. – can my husband and me claim it separately so that we cover at least 3,00,000 out of the total interest that we are paying? We have taken the loan together though the EMI goes from my salary account

    1. NIharika

      You guys can claim it seperately but here are the conditions

      1. The flat should be on both people name
      2. The Loan was taken by both of you
      3. The EMI is paid by both you people , because then how do you prove that both of you are repaying it ?


    2. ASHAL JAUHARI says:

      Dear Niharika, is the property in question is a joint ownership or single ownership? Is it for self consumption or on rent? The EMI pmt. is from your account but is your husband making any contribution to your account for the payment of that EMI? Please clarify.



      1. Niharika says:

        1) Property is on the name of both of us
        2) It is for self-consumption
        3) Well, contribution by my husband to my account for EMI payment – not explicitly, but we can have some amount transferred from his a/c to mine every month, if this would suffice

        Also, I had another question – Possession of our house would be in Dec 2012. Can I go ahead and declare the interest paid for home loan in April 2012 itself because possession date is in this FY itself, for tax benefit?

        1. ASHAL JAUHARI says:

          Dear Niharika, till the possession of your property is not with you (both of you), you can’t claim tax benefit on interest part. From now onwards make it a habit to receive at least 50% of EMI amount from your husband’s account to your EMI payment account to avoid any future problems.

          As the ownership is joint, both of you are eligible for 1.5L Rs. individual interest benefit. So in total 3L Rs. interest ‘ll be available for tax benefit.



          1. Niharika says:

            Thanks a lot Ashal. I also wanted to know, after recieving the Possession certificate as well, we may still be staying in the rented house till the time that new house is ready with all facilities (interiors, etc).

            During this period, can I be claiming tax benefit on the interest part of EMI and the HRA benefit also?


            1. ASHAL JAUHARI says:

              Dear Niharika, Yes is the answer, you may claim both HRA as well as home loan tax benefit in the same FY.



            2. navin kumar says:

              In continuation of above query and responses,I understand that in case of co borrowed loan for co owned proprty, we are eligible for 1.5+1.5=3 Lpa interest waive off.My query is regarding prinicipal amount tax benefits eligibility. Eould it be 1 L ( jointly) or it would be 1L+1L=2L under section 80C

            3. ASHAL JAUHARI says:

              Dear Navin, it ‘ll be 1+1=2L for both of you.



  134. Saurav says:

    Hi Manish,

    i am already claiming deduction on the interest that i am paying to the home loan from the bank.
    additionally, can i get a deduction on the interest that i am going to pay to my uncle for the money borrowed from him for buying a house (for the balance amount of the payment for the flat)??
    the flat is rented out, while i myself live in a rental flat, hence technically i can claim exemption on the complete amount that i am paying as interest.
    what documents will i need to produce if i want to claim such an exemption?


    1. ASHAL JAUHARI says:

      Dear Saurav, Yes you can claim deduction against the combined interest paid by you for loan from bank + loan from uncle taken for the rented out property. You have to show youe rental income. In case of Uncle’s loan, had you prepared any loan document? If not even then, I assume that the transaction was done though cheque or net banking transfer of amount from his account to your bank account. Please prepare a loan document between you & your uncle mentioning the T & C of the loan taken by you & please make specific objective in that document that the loan is to be used as home loan to purchase a property.



      1. Saurav says:


    2. Saurav

      Yes .. you can claim the interest part on the laon taken from your uncle .. you need to show the loan papers (i am sure you must have prepared some legal document for this)


    3. Saurav

      their new term plan is updated one with better riders and extended the duration of term plan with low premium .. Rest everything is same .. if you trust the company , you can move ahead else go with HDFC/LIC/SBI !

  135. hard panchal says:

    int.on house propert is deductible if loan is taken from relative??

    1. Hard

      Yes , definately ! ..

  136. Subhasis says:

    Hi Manish,

    I’ve few queries on tax benefit for housing loan which is as below.

    Around 1 year back, My mother, me and my younger brother took loan for building a house. My mother is the owner of the land where we built the house now. My mother is the main applicant and me and my brother are coapplicants.

    We were under assumption that we’ll be getting the tax benefit as we are co-applicants (Me & My Brother). But we came to shock when we came to know that to get the tax benefit, we need to be the owner of the house.

    So is there any way we can get any tax benefit ?

    Also if my mother has to transfer the property on our name, what will be the procedure ?

    Also is this possible to sell a house which is under loan ?

    Thanks in advance.

    Thanks & Regards.

    1. ASHAL JAUHARI says:

      Dear Subhasis, if the bank permits, your mother may sell a part of her ownership to both of you. In this case, after becoming the owner of the property you & your brother may claim tax benefit.

      Yes, you may sell the house which is under loan.



  137. Anjali says:

    Hi Manish,

    My husband and I are planning to buy a house. The house will be on the name of me and my mother-in-law. My husband and I would be co-applicants to the home loan.

    Two questions:
    1. Since I will be servicing the loan alone, can I claim 100% benefits.
    2. Can my husband show the rent to his mother for residing in that house? (And since her income would still not fall into the taxable category, we could save this tax!)

    Request your opinion/ advice on the same.


    1. ASHAL JAUHARI says:

      Dear Anjali, you are going to play with fire. You said your MIL & you ‘ll be the co-owner. So for the situation that your husband ‘ll pay rent to your MIL (his own mother) ‘ll invite trouble from Income Tax people.

      Being co-owner, you ‘ll also be considered for that rental income & on the other hand, being a husband & wife, both of you are not supposed to pay rent to either of you. It’s not possible from taxation point.

      May I know, why you are adding your MIL’s name & not your husband’s name in the property? Do your husband own some other property already under his name?

      Please answer.



    2. Anjali

      1. Yes you can claim the tax benefits upto the limit you contribute to it

      2. Yes . this is smart way of doing it and it will work

    3. Anjali says:

      Dear Manish, Ashal,

      Seems like the opinion is divided here. So, I am confused even more….

      Ashal, is it necessary that I will be considered for that rental income? Realistically speaking why can’t that income accrue just to my MIL?

      Manish, whats your opinion on that?

      PS: We are not adding my husband’s name as we want to keep the option open for him to own another property further down the years….


      1. Anjali

        I think Ashal has a good point here which I didnt look at . Think about it yourself .. Your husband giving rent for the house which you also own , how is that possible . I am not saying it from rules point of view ,but tomm if tax officials raise this point , then what will be your answer to it ? Can you share it here .

        Also I am not sure if the home loan guys will pass the loan itself if its not on the loan applicants name (like your husband) .


  138. Lavanya Challa says:

    I want to take a land for 6 lakhs. I enquired and got to know I would not get a home loan. So I will take a personal loan. Now, can I take a home loan later and pay off the personal loan?

    1. Lavanya

      It does not work that way .. you cant do that . no company will give you home loan like that

  139. Rakesh Joshi says:

    I have booked a flat and just sanctioned my loan. SBI has disbursed 20 lakhs to builder now. Still 20% amount needs to be paid. My flat will be ready in june and the remaining amount will be paid then. Will my emi start immediately? If not, then what amount will I be paying now? What is the formula to calculate that? Is pre-emi a default option or had I to specify it at the time of sanctioning?

    Also, I came to know that there is some relaxation period before start of home loan. I was told that it had to be specified at the time of submitting the application. I don’t remember if I have done that. Is there a way to do it now?

    1. Rakesh

      generally these are the questions which a person finds out before taking the loan , it will all be as per the documents you have signed, there is no general rules .

  140. deepak babbar says:

    hi i have booked a flat but i still have not the possesion of the flat and becouse of that i m paying interest only upon the loan amount will i get the deduction under section 24 in this financial year.EMI WILL START FROM SEPEMBER 2012 ONLY

    1. No tax benefit on interest if you dont have possession !

  141. Ashal Jauhari says:

    Dear Rajesh, Lender ‘ll try it’s max. to keep your loan active for a longer duration. That’s where it’s profits are lying.

    On our part, we have to try our best to prepay our loan as early as possible.



  142. Rajesh says:

    Dear Ashal,

    Thanks a lot for this pin-pointed clarification.

    And yes, it is typical of the lenders to stretch the loan tenure by discouraging loan fore-closure.


  143. Rajesh says:


    Is there any IT rule that if I pre-pay and close the home loan before expiry of 3 years, then all the previous years Income Tax rebates will be reversed? I am being told the same by my banker… Pls let me know of any such rule..


    1. Ashal Jauhari says:

      Dear Rajesh, No your banker is telling alie. There is no such restriction to prepay your home loan.

      The reversal kind thing happens only if you are claiming section 80C benefit against the principal repayment & selling the house, I repeat selling the house before 5Y holding period & that too up to the extent of Tax saved under section 80C. No reversal of section 24 i.e. interest part. So Interest related tax benefit remains intact.



    2. Rajesh

      I guess you will get right answer at : https://www.jagoinvestor.com/forum/

  144. sudhank says:

    Taken loan of Rs 12 lac frm hdfc. first cheque of rs 6 lacs was issued on 13-feb-12. but during online surfing, i cam to know that rs 6,000 will be deducted on 15-mar-12 through ecs and balance tenure increased to 241 month while original tenure is still 240 months. i would like to know how this figure came as pre emi of rs 6,000 and tenure of 241 months. here i would like to mention that this rs 6,000 will go to interest portion only not in principal.

    1. Ashal Jauhari says:

      Dear Sudhank, As it’s a partial withdrawl from your sanctioned loan amount, HDFC is charging a PRE EMI interest for one month & this same one month is added into your normal loan term. The 6000 Rs. is the interest for the amount of 6L Rs. used by you from 13th Feb 2012 to 15th march 2012.

      The calculation is rightly done by HDFC in this case. Please understand, PRE EMI interest itself means that you are paying merely interest & not the full EMI. So the question of adjusting principal from this 6000 Rs. does not arise.



    2. Sudhank

      This topic is best suited for discussion on jagoinvestor.com/forum

  145. Tarun Dua says:

    Can anyone give declaration in Form 12C (Rule 26B) that he will get possession of house before the end of Financial Year & what is the emploter role in this connection?

    1. Ashal Jauhari says:

      Dear Tarun Dua, Please do note, Form 12C for declaration purpose has long been abolished by the Income Tax deptt. A plain declaration to your employer for your savings & home loan etc. related deduction is enough. The onus lies on the employer to check & verify the authenticity of the declaration.

      As far as your basic query for declaring the house ‘ll be under possession of you by the end of FY & basis of this to avail tax benefit is not possible. The act is very clear on this. The possession of the house is a pre condition to avail tax benefit on your house.

      In case you are not able to show the proof of possession to your employer within time in this FY & the excess income tax is deducted from your salary, please do not worry as you have the option to claim your tax benefit at the time of filing your Income Tax return.



  146. Ashal Jauhari says:

    Dear Chander Goyal, the Income Tax Act is very clear that possession of the house is a precondition to avail Tax benefit on the interest part. It’s your employer or rather your accounts deptt. who erred in giving you the benefit with out confirming the possession of your house.



  147. Chander Goyal says:

    Hi Manish,

    My experience says otherwise wrt point 1,

    I have taken home loan for an under construction home in noida, I have opted for tranche EMI scheme from HDFC ltd.

    I submitted the proof of the same with my organisation and was allowed to claim both interest and principle component as deduction,

    Please correct me if the procedure followed by my employer was not correct

  148. Ashwin says:

    Dear Ashal,

    Thanks for helping me out.

  149. Ashwin says:

    Dear Ashal,
    Thanks for the reply.

    Does it mean that I have to show rental income from January to March 2012 and interest from April 2011 to March 2012?

    And sorry for not posting my query on the forum. Since this thread included different types of queries, I thought it was good enough to post it here itself. Would had been more better had I posted it on the forum itself.

    1. Ashal Jauhari says:

      Dear Ashwin, Yes the rental income from Jan to march 2012 & Interest from April 2011 to March 2012. Please calculate the same as per the examples given above or post your query in the forum & we may discuss there.

      Why am I insisting on forum? The reason is you ‘ll not only get your basic query answered but also you ‘ll get several more discussions going on in the forum which may help you.



  150. Ashwin says:

    Will some one please answer to this;

    I have got possesion of my flat in Dec 2011. I dont stay in Pune, where this property in located. Hence, I have rented it out from Jan 2012.
    My interest on the home loan is more than 1.5 lakhs. I want to claim income tax waiver on complete amount.
    My doubt is, will be the interest on loan be calculated for complete financial year or just for last 3 months, since this property is rented out from Jan 2012.

    1. Ashal Jauhari says:

      Dear Ashwin, Why are you not posting your question on the forum?


      By the way a direct answer to your query is yes, you may claim full FY interest benefit adjusted for your rental income.



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  152. Manmohansinh says:

    Can I get Income Tax benefit of my F.D. from a bank ?

    1. Ashal Jauhari says:

      Dear Manmohansinh, You are eligible for tax benefit only on Tax saver Bank FDs & that too limited to just 1L Rs. within the over all limit of section 80C.

      Please do note Tax Saver FDs have a lock-in period of 5Y & you can’t break or take any loan against these FDs in between if you require money.



  153. shyam says:

    hi Ashal
    thanks for the info.. till now i was under the impression that we have to forego the principle before possession and only interest can be claimed after possession in 5 equal installments

    request you to please answer the 2nd part of my question which is as below
    i would like to know if wife is co borrower and co owner , but if the husband is the only earning member(loan amount eligible was calculated on husbands earning only and wife was shown as nonworking in bank application)..can he claim 100% of the EMI paid for his deductions

    1. Ashal Jauhari says:

      Dear Shyam, From the query, what I understood is that wife’s name is for practical reasons – in your absence (if you are no more), she can sell the property being the co-owner of the property. As all the down payment has been done from your own money as well as you are paying the EMI amount from your own money & your wife being a no income person, you are entitled to claim full income tax benefits of the property in question.



  154. Ashal Jauhari says:

    Dear Shyam, please check the wordings of section 80C & section 24b at the income tax site – https://law.incometaxindia.gov.in/DIT/Income-tax-acts.aspx

    I’m reproducing below for section 80C for your quick reference. Quote –

    (xviii) for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property” (or which would, if it had not been used for the assessee’s own residence, have been chargeable to tax under that head), where such payments are made towards or by way of—

    (a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

    (b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or

    (c) repayment of the amount borrowed by the assessee from—

    (1) the Central Government or any State Government, or

    (2) any bank, including a co-operative bank, or

    (3) the Life Insurance Corporation, or

    (4) the National Housing Bank, or

    (5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub-section (1) of section 36, or

    (6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

    (7) the assessee’s employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

    (8) the assessee’s employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society; or

    (d) stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee,

    but shall not include any payment towards or by way of—

    (A) the admission fee, cost of share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or

    (B) the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out; or

    (C) any expenditure in respect of which deduction is allowable under the provisions of section 24;

    Unquote, Now you may check on your own from the above that possession is not a precondition for principal repayment for a home loan, tax benefit under section 80C.

    Now I’m reproducing below the section 24b wordings. Quote –

    49 [ Deductions from income from house property.

    24. Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely:—

    (a) a sum equal to thirty per cent of the annual value;

    (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:

    Provided that in respect of property referred to in sub-section (2) of section 23, the amount of deduction shall not exceed thirty thousand rupees :

    Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed 50 [within three years from the end of the financial year in which capital was borrowed], the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees.

    Explanation.—Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years:]

    51 [Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.

    Explanation.—For the purposes of this proviso, the expression “new loan” means the whole or any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose of repayment of such capital.]

    Unquote – Here for section 24b the language is very clear that construction is completed, which was not the case for section 80C.
    I hope it clarifies your doubts.



  155. shyam says:

    hello Ashal

    In your recent answer to vijayan , you have said that principle can be claimed without possession.. many articles i have read, say that one cannot claim principle until possession and has has to fore-go it forever and that interest only can be claimed, that too after possession

    2nd i would like to know if wife is co borrower and co owner , but if the husband is the only earning member(loan amount eligible was calculated on husbands earning only and wife was shown as nonworking in bank application)..can he claim 100% of the EMI paid for his deductions


  156. Ashal Jauhari says:

    Dear Vijayan, I’m sorry the prev. reply was meant for dear Manmohansinh. Here is for you.

    To claim interest benefit under section 24b on your home loan, possession of your house is a precondition. So unless your possession certificate is not with you, you can’t claim interest benefit.
    Home loan principal repayment tax benefit under section 80C is independent of possession & you may claim the same even if the possession of your house is not with.
    As your employer is demanding proof till 30 or 31st Jan 2012 & you are not in position to do the same, please don’t worry, you may claim the same while filing your income tax return in May June 2012 & get the refund of excess tax deducted from your salary.

    Till the time you are actually living on rent & can produce the proof of the same, HRA tax benefit is available to you.



    1. vijayan says:

      thanks a lot for the response. So that means, with the possession certificate, the interest amount divided by 5, (ex.Rs.300000/5=60000) only can be claimed for this year 2011-12 right?. My builder promised to give me the possession letter by 30th Jan 2012 and am planning to claim interest component as well as part of tax submission. Is it 1/5th will have to be claimed along with HRA, or whole interest amount can be claimed along with HRA ( which is not possible I believe)?

      1. Ashal Jauhari says:

        Dear Vijayan, Please do note, the pre EMI interest paid from april 2011 to Jan 2012 & normal interest paid for Feb. 2012 & march 2012, i.e. total interest paid in current FY is eligible for tax benefit under section 24b for the self occupied house within the over all limit of 1.5L Rs. So the unclaimed interest for you is only for the months Jan 2011 to march 2011 which you w’d have to claim @ 20% each in 5 FYs.

        Please do not confuse yourself with HRA & home loan issue. Till the time, you are actually living on rent, HRA benefit is available for you. Home loan benefit for interest ‘ll comes in to picture after possession only.



  157. Ashal Jauhari says:

    Dear Vijayan, Please calrify –

    Your single ownership house is in X city.
    Your joint ownership house is in Y city.
    Both of you are living in Z city due to your jobs.Am I correct in my understanding?



  158. Manmohansinh says:

    I had purchase home at X city and I am taking Tax benefits of the same.If My wife take new porperty in Y city as a joint home loan Can I get Tax benefits of the same.

    Or Can my wife take 100 % tax benefits ?

    Kindly reply.


    1. Manmohansinh says:


      1. Ashal Jauhari says:

        Dear Manmohan, The Y city property ‘ll be a joint ownership or you are mere the co-applicant in the home loan?
        For better interaction, you may post your question at forum also.




        1. Manmohansinh says:

          Property is in the name of my wife but i am co-applicant in home loan.

          1. Ashal Jauhari says:

            Dear Manmohansinh, as you are merely the co-borrower & not the co-owner of the property, you can’t claim any tax benefit on the city Y property. Your wife being the sole owner of that property, ‘ll claim full benefit.



  159. vijayan says:

    I am paying preEMI since Jan 2011 (opted Maxgain scheme in SBI and opted PreEMI for 18 months). Posession expected in Feb 2012 and 3 months back Bank delivered full amount to builder and I got my registeration as well done, But I need to submit my tax proof this month before 31st Jan 2012. I got Interest certificate from Bank which does not show anything about PreEMI component, but it just gives Principal and interest component only. can I just claim Principal and Interest this year?. Do I need to get possession certificate from Builder? can I claim HRA as well since I am staying in Rented house and I have rental agreement till Feb 2012?

    1. Vijayan

      Yes you would need possesion certificate .. and you can claim HRA also

    2. Vijayan

      Yes .. you will need

      1. Dishant Verma says:

        Manish, what is pre-emi ?

        1. Pre-EMI means you pay interest only on the amount disbursed to you , not full

  160. shyam says:

    hello everyone

    I would like to know does it matter when i get the possession in financial year…like if i get it in march 2012 so can i claim interest and principle paid from april 2011…. can i claim deduction for processing fees of the loan,stamp duty and registration fess,if all done in this financial year..awaiting responses thanks

    1. Ashal Jauhari says:

      Dear Shyam, even if your possession certificate is of date 31-03-2012, full FY 2011-2012 interest ‘ll be available for set off within the over all limit of 1.5L Rs. for self occupied house.

      Processing fee paid to bank is not eligible for tax benefit.

      Stamp duty & registration fee are eligible for tax benefit under section 80C within the over all limit of 1L Rs. in the FY of expenses made.



      1. Srinivasa Reddy says:

        Dear Ashal,

        here I have query, as you said even if the possession certificate date is 31-03-2012, the total interest is eligible for tax exempetion (upto 1.5L) , here can you please clarify the total interest means?.

        I mean, Actual EMI starts from the month of march (assume the registration happened in march), prior to that we will be paying Pre-EMI, so the total interest includes pre-EMI intrest also?

        1. ASHAL JAUHARI says:

          Dear Srinivasa Reddy, even the Pre EMI interest paid in the FY 2011-2012 in the above example ‘ll be eligible for tax benefit within the over all limit of 1.5L Rs. for self occupied house.



          1. Srinivasa Reddy says:

            Dear Ashal,

            Thank you very much for your quick response,
            I have two more queries.
            1. in your response you mentioned that If the house is self occupied, what if the house is given for rent to some body?
            2. Right now I have taken home loan form Axis bank for the flat of an apartment which is under construction and will be completed by Oct-2012 and probably possession may happen in this FY as I the owner and my wife as co-borrower . Now I want to make my wife as Co-owner so that she also can get tax benifit (she is also working and earning). Is it mandatory to convert my wife status from Co-Borrower to Co-Owner to get tax benifit? if we both want to share the EMI, do we both get interest tax exemption benifit for 1.5L indvidually (if the total interest is more than 1.5 lakhs and up to 3lakhs) or together upto 1.5lakhs?

            What is the procedure for making my wife as Co-Owner from Co-Borrower?
            Thanks & Regards

            1. ASHAL JAUHARI says:

              Dear Srinivas Reddy,
              1. Please do note in case of rented out property, Full interest with out any limit ‘ll be available for tax benefit but at the same time, rental income ‘ll be added to your income from all other sources. For exact calculation of rental income please read my prev. replies to others.

              2. In case of wife is not an owner, she can’t claim any tax benefit. If the property is not registered yet, ask your builder/developer to include name of your wife also into the property document. If the property is already registered under your name. You have the onoly option to sell 1/2 portion to your wife with the consent of your banker (Axis bank in this case). The ownership of the property is pre condition to claim any tax benefit. If I assume both of you are co-owner, than 1.5+1.5 = 3L Rs. interest is the max. limit which you & your wife can use individually.



    2. Shyam

      No it does not matter when did you get it in a financial year .

  161. Ashal Jauhari says:

    Dear Sandeep, the house in question is still under construction or completed & the family (your parents) is living there?

    Please clarify.



  162. Sandeep says:

    Hi Ashal/Manish,

    I have taken a home loan for Constructing a house in my home town. In my current organization they need possession letter to claim home loan tax benefit, which i dont have. Please let me know what documents i can provide other than possession letter in case of self constructed houses.


  163. Vijay says:

    Hi Ashal/Manish,
    Looking forward to your clarification on Tax benefit on “Interest” part of Home Loan. I bought my first (& only) house last year [April 2011] for 40Lakhs in Blr and from May till Nov it was not occupied. I gave it for rent only from [Dec 2011] for 12000 rupees. I currently stay in Mumbai. As my my interest outgo for homeloan is almost 4Lakh +, showing rental income (as 48000) will help me save more tax or can I claim only 1.5 Lakhs as benefit? Please suggest?

    1. Vijay

      This 48000 will be counted as your income , you should be able to claim total 4 lacs of interest as the house is given on rent and is not self occupied . I have a little confusion if this can be done as its a first house .. because generally second house is given on rent and is considered in most of the cases


    2. Ashal Jauhari says:

      Dear Vijay, here is the answer for your query. Your Tax benefit ‘ll be calculated as below –
      I’m giving you an example for easy understanding –
      @12000 Rs. mly,
      A. Annual rental value of the house = 12000*12 = 144000
      B. Actual rent received = 12000*4 = 48000
      C. Tax paid to local municipal authorities = 2000
      D. Actual Rental income = B – C = 46000
      E. 30% standard deduction on D = 13800 (this is towards upkeep & maint. of house, no matter you are actually spending less or more than this amount, it ‘ll remain fix @ 30%)
      F. Interest paid on home loan = 400000
      G. Net income from house property = D – (E+F) = – 367800
      The G above is a loss which can be set off against your salary income.
      In the above example, please put in your actual nos. For property tax & recalculate as per this given example.

      As the house was on rent for 4 months only in actual, it’s not fault. You can still claim the full benefit.

      Dear Manish, if a person put his first house on rent & showing the rental income, the Income tax rules allow the full interest benefit. There is no compulsion that the first house should be self occupied & the rental income ‘ll come in to picture only from the 2nd house onwards.



  164. Ashal Jauhari says:

    Dear Ritesh, As you are co-owner of a property in Delhi & the same is declared as self occupied, another property in Hyderabad can’t be self occupied for taxation purpose. Out of the 2 properties, you have to opt which one is self occupied & which one is on notional rent.

    Till the time the H’bad property is not under your possession, no tax benefit on it’s interest portion ‘ll be available for you.

    Yes for principal repayment of both home loan, you may claim it for tax benefit under the over all limit of 1L Rs. under section 80C.

    If your wife is not working & her name is merely for future operational purpose (she may sell house easily in your absence being co-owner), you may claim full interest amount for tax benefit as you are providing all the money for house purchase be it down payment of the house or EMI payment later on.

    Till the time your house in H’bad is not ready for possession, you may claim HRA benefit. Once you move in to that house to live in you can’t claim HRA benefit.



    1. Ritesh Chauhan says:

      Thanks Ashal for the response.

      I plan to declare Delhi house (which I co-own along with my brother) on notional rent (since the rental income, technically, will be divided into 2 parts and therefore the tax burden for me will be less). Please advice.

      Also, the Hyd house will be ready for possession in couple of months. So, I plan to declare it self-occupied and hence lose some money on HRA 🙁 But I can claim full principal (under 1 lac bracket) and complete interest portion. Please confirm.

      For taking 100% tax benefits for Hyd house (since my wife has no income), do I need to submit some kind of declaration/affidavit?


      1. Ashal Jauhari says:

        Dear Ritesh, sorry for the late reply as I missed your query. Yes you may claim Delhi house for notional rent, if the total equation is favorable to you.

        Please do note principal amount of both home loans is available for benefit under section 80C. Yes once you declare H’bad house, you ‘ll lose your HRA benefit.

        If your employer demands any proof, you may give a declaration on a plain paper that the name of your wife is merely for operational purpose & to counter future hurdles to sell house in your absence.



        1. Ritesh Chauhan says:

          Thanks Ashal and Manish. This is really helpful.

  165. Ritesh Chauhan says:


    I have an existing house loan along with my brother. We both are joint owners and claiming tax benefits, 50% each. The house is in Delhi.
    Now, I am planning second loan for buying a house in Hyderabad (I am currently working here). I have following queries:
    Can I claim both principal and interest for tax benefits?
    What will happen to my HRA, if the Hyderabad property is still under construction?
    If I make my wife as joint owner (she is an housewife and has no source of income), will I get all the tax benefits or just 50% as she is joint owner?


    1. Ritesh

      You can get only the interest benefit on the second house and you can also claim HRA

      If you wife is the co-owner and co-borrower , how will give give the EMI ? You can claim tax benefits on interest and there will be no limit on that as its your second house . the only thing is you need to have a possession certificate from builder , else you cant claim the deduction on under construction property


      1. Dishant Verma says:

        manish , so do u want to say 80 c benefit for principal repayment applies to only first house and not on the second one .

  166. Chandraprakash Sarathe says:

    Very useful information..keep up the good work.
    I have a query Example : Suppose Ajay bought a house on loan on 5th June 2010 and he pays total 4 lacs as interest in next 2.5 yrs and gets possession on 7th Nov 2012 . He will be able to claim this 4 lacs Rs in equity installments in the next 5 yrs period , which is 80,000 per year in 2013 – 2017 . However the total limit for exemption will still be 1.5 lacs per year.

    Here so Ajay can claim 80000+1.5 lac from 2013 – 2017 or total 1.5 lac from 2013 – 2017 ?

    1. It would be total 1.5 lacs only ..

      You would say whats the use then .. because anyways its 1.5 lacs per year .. but the thing is suppose his total interest in a year is generally 90k only , so he is not able to exhaust it fully .. but suppose he is allowed to use his old interest also , then by combining it may be he can reach 1.5 lacs


    2. Ashal Jauhari says:

      Dear Chandraprakash, if the house is self occupied, the interest benefit is limited to 1.5L Rs.

      If the house in question is on rent, the interest benefit is unlimited.

      For the given situation, My take ‘ll be to go for a notional rent option if the adjusted amount for notional rent, come out more than 1.5L Rs.

      If possible to you, can you quote the possible rental value for your flat?



  167. Ashal Jauhari says:

    Dear Venkatesh, in case you are not able to file the details with your employer till due date i.e. 13th Jan, You can claim the tax refund while filing your income tax return.



  168. Venkatesh says:

    Hello Manish,

    Thanks for the article.
    Could you please help me clarify the below query?

    I’m currently paying Pre-EMI (Interest) for a flat i have purchased last year and the same is expected to complete and would be ready for possession by Mar-2012.

    From your points, i’m clear that i can show the tax exemption for the total Pre-EMI interest amount i have paid in equal parts of 5 starting from this financial year (as I would be getting the possession before 31 Mar 2012). Below are my questions..

    1. How would I produce the possessoin letter now as the cut-off date to submit the investment proofs is 13th of this month?
    2. How would I know how much is the total interest amount bank is gonna pay till Mar-12?
    3. What are the documents i need to submit to avail the tax exemption on the interest part i have been paying?

    Thanks much in advance,

    1. Here is the reply from Ashal for you


      Dear Venkatesh, in case you are not able to file the details with your employer till due date i.e. 13th Jan, You can claim the tax refund while filing your income tax return.



  169. Ashal Jauhari says:

    Dear Gaurav, It’s advisable to post your query in the forum.

    This question should be best answered in forum only : https://www.jagoinvestor.com/forum/



  170. Gaurav says:

    I bought a house in Mar 2007 at 14.5 Lacks and Took a Renovation loan of 3.5 Lacks in Mar 2009 and Finally Sold it in July 2011 at 21.5 Lacks. Now I have few Queries:

    a) Can I claim the principle and interest for 4 months period of Apr 11-Jul 11 ? As I paid 75K as Interest and 17 Lacks as principle but I do not hve possesion till Mar-12 Finanacial Year end.
    b) Do I have to return the benifits under section 24 taken in last 4 years having made Long Term Capital Loss on the peoperty ?

    Thanks in Advance !!


    1. Gaurav

      1. No , the tax benefits are there only when you possess the home

      2. No , Nothing like it


  171. Subendu says:

    Hi Manish/Ashal,

    It’s really good article and Q&A followed by the article. Please clarify on my query with figure.

    I am staying at my parents place and claiming the HRA (company provides Rs. 12500 PM) , parents show that in their other income and pay tax. We got overall benefit on tax slab as i am with 30% slab and my parents on 10%. House on their name and they have built it.

    I have invested/planned to purchase 3 house. 2 are in same city and 1 in different.

    House 1 : interest pay per annum is 1,54,692.00 (12,891 pm). Located in same city (outskirts of city) , but in near future BDA palnned to expand to those area also.
    House 2 : interest pay per annum is 1,69,596.00 (14,133 pm). Located in same city (outskirts of city) , but in near future BDA palnned to expand to those area also.
    House 3 : interest pay per annum is 1,05,996.00 (8,833 pm). Located in different city.

    Please explain me how to save maximum tax on principal and interest on above property and also from HRA.


    1. Subendu

      This question should be best answered in forum only : https://www.jagoinvestor.com/forum/

  172. Ashal Jauhari says:

    Dear Deepak, From your query, it’s clear that both of you are co-owner & co-borrower. In this case, both of you are eligible for 1.5L Rs. individual limit. So the 3L Rs. interest payment can be divided as 1.5L Rs. each between both of you & accordingly both can claim tax benefit under section 24 of Income Tax Act 1961.



  173. deepak says:

    hi i have a question i bought a flat for which i m paying interest around 300000 per year that flat is registered on the name of my wife and me.. she is also co-borrower
    i want to know if we are paying EMI 50-50 percent how much amount we can claim under section 24 individually. as u mentioned that maximum limit is 150000 . i want to know this limit is for an individual means both can claim 150000 or i will be 75000,75000 in this case..plz reply thanx

    1. Deepak

      You both can claim upto 1.5 , so total is 3 lacs , but note that you should also have the house in your name , if the house is totally on your wife name, then you cant claim the tax deduction


  174. Ashal Jauhari says:

    Dear Surinder, Please read my reply again. For loan a simple documentation is required i.e. on a stamp paper of say 100 Rs. with the terms & conditions of your loan written on that stamp paper & signed by both parties.

    What I meant plain paper was for income tax benefit on interest part.

    There is no such restriction that from how many parties you are arranging the loan for a single house.



    1. KK BABU says:

      Dear Mr. Ashal & Manish

      Really this is a great article and an eye opener to many of ‘Younggen’ team.

      To be frank almost all the 4 things mentioned in the Main Article are new to me (I am partly aware about Point 1). I am very much interested in point 3 (ie., loan taken from frds/family). I took housing loan of about 19.5 Lakhs from IDBI bank and 10 Lakh loan from my father (I have 2 yngr brothers). House possession was taken in March 2011 and house is rented since then. I was under impression that i could show only the bank’s interest as part of my other income. But, from your article, i understood, interest repayment for loan took from father can also be shown.

      Now coming to the documentations part, as my father & brothers have faith on me, they took only Promissory Note as proof for giving me loan. No Agreement on Stamp Paper was signed. Is there any possibility for me now to set off the interest paid to my father? Can I now make agreement copy on stamp paper with current date and still claim for the current financial year.

      Hoping your great reply. Regards, KK Babu

      1. Ashal Jauhari says:

        Dear KK Babu, Yes you may still prepare your loan documentation. To keep the matter clear, please retain your original promissory notes also.

        Please do note the interest paid to your father as well as brothers ‘ll be their income respectively & it’s taxable for them after adding it to their income from all other sources.



        1. KK BABU says:

          Thanks Mr Ashal. I will try to do the same now.

  175. Surinder says:

    Thanks a lot Ashish.

    So you are saying if my friend or lets say my father or brother giving me home loan, and have faith in me and do not sign any documents and just give a certificate mentioning the principal and interest breakup, that one document is enough every year to claim the tax rebate.

    Also let me complicate the question a little bit. Lets say on the same house where I have taken the loan from Bank, I take the rest amount of Loan from my father as well as my friend. What I am asking is whether there is any limit to the number of parties on the same house from whom you are borrowing loan or there can be infinite number of parties


  176. Ashal Jauhari says:

    Dear Surinder, loan documentation is different thing & interest certificate for the purpose of tax benefit is different thing. For example in case of bank –

    At the time of sanctioning the loan, the bank & you sign a lot of papers & some on stamp papers also. Where as to claim income tax benefit, you just visit the branch, a simple letter from bank mentioning the total EMI to be paid with the break up of principal & interest in that EMi repayment is enough to avail at source tax benefit from your employer. So for the given situation – Yes you have to do a simple loan documentation with your friend (for your ease, you may use your parents, in laws, siblings, spouses of siblings also for such internal loan). To claim tax benefit, every year, just like bank, your friend ‘ll also give you a simple paper mentioning the amount of interest either paid or to be paid the FY.

    Please feel free to ask if you need more help.



  177. Surinder says:

    Thanks Ashal,

    That example was great and it clarifies my doubt.

    Now my question is about documentation needed from my friend. Is it not enough if my friend just give a certificate to me that he is offering me loan at so and so rate of interest with 2 or more witenesses attesting to that. Is there some specific set of documentation to be prepared in predefined format to be eligible to take home loan from my friend so that I can claim Tax discount on that interest


  178. Ashal Jauhari says:

    Dear Harjit, there is a clarification in dear Manish’s reply. As the house in question is on rent, you can claim full interest benefit. In fact you may revised your ITR for FY 2010-2011 & even claim the unclaimed interest of that year.

    I’m giving you an example for easy understanding –

    @ 8500 Rs. mly,

    A. yly rental income = 102000
    B. Tax paid to local municipal authorities = 2000
    C. Actual Rental income = A – B = 100000
    D. 30% standard deduction on C = 30000 (this is towards upkeep & maint. of house, no matter you are actually spending less or more than this amount, it ‘ll remain fix @ 30%)
    E. Interest paid on home loan = 300000
    F. Net income from house property = C – (D+E) = -230000

    The F above is a loss which can be set off against your salary income.

    Above was an example, please put in your actual nos. For last FY, as the house rent was from August to march & before that from April to July, the house was not on rent, so take the rental value of 8 months only for calculation.

    If you are still in doubt, please check section 24 of income tax act 1961.



  179. Harjit Singh says:

    Dear Manish,
    Hi! I’m a salaried class, I’d taken home loan in Nov 2007 for society flat in Indirapuram Ghaziabad. The possession of the flat was given to me in May’2010. Since Aug’2010 the flat is on rent. I’m staying with my parents in South Delhi. My workplace is also in South Delhi. For the year 2010-11, i had paid my income tax adding the rental income to my salary, & i hadnot taken the benefit of HRA. Also thr’ the discussion above i’d come to know that if i’m paying tax on the rental income, the whole of the amount paid against intrest can be deducted from the income. Please confirm.
    Thanks & regards,Harjit Singh

    1. Harjit

      You can claim the tax benefit from the the interst paid. but can not be deducted


  180. Ashal Jauhari says:

    Dear Surinder, Yes you are right. for a let out property the ceiling of 1.5L Rs. home loan interest is not applicable. For your given situation I’m trying to explain with an example – House cost – 50L – @ 20-80 ratio, Friend’s loan 10L & Bank Loan40L Rs.

    Now The interest you are paying for 10L Rs. + the interest for Bank’s 40L Rs. ‘ll be available for set off against the rental income & then your salary income.

    Any reasonable rate of interest charged by your friend ‘ll be good say 10-12% as per current market rate. In case of your friend, the interest received from you for those 10L Rs. ‘ll be his/her income & S/he w’d have to pay income tax as per his/her tax slab.



  181. Surinder says:

    Hi Manish,

    Why are you saying an upper limit of Rs 1.5 lakhs. I am not planning to occupy the property but let it out in which case I believe there is no upper limit on the interest. So my question is that if I take home loan partly from bank and partly from my friend and then let out the property and then claim the tax rebate on both the interests, i.e the interest paid to the bank as well as the interest paid to my friend, is that valid.

    As far as the documentation is concerned, I am not sure why you say that the same kind of documentation is required like Bank because Bank will mention in their document that the house will belong to them unless I pay off the complete loan but the same statement cannot be mentioned by my friend since the house is already in the name of the bank , I don’t think it can be in the name of any other party


  182. Surinder says:

    I want to take a home and will be letting it out for initial few years. Also I will be taking home loan from Bank but Bank is only ready to provide loan on 80% amount of the property because they says its RBI guidelines. I do not have the rest 20% to make down payment. One of my friend is ready to fund me the rest 20% on interest, Now my question is if I take this home with 80% loan from Bank and 20% loan from my friend and then I let out that house, can I claim the tax rebate on both the interests, one being paid to the Bank and the other being paid to my friend. Please clarify. Thanks

    1. Surinder

      Yes you can .. if you see the article video , you will learn that you can pay the interest to Bank or friend and claim the interest part for both. however you can claim the principle part only on the loan taken from Bank , not friend


      1. Surinder says:

        Thanks Manish for your prompt response. You said that I can take interest from friend or Bank but my question was from both i.e. from Bank AND Friend, not one of them and then claim the tax discount on both the interest parts, the interest I am paying to the Bank as well as the interest I am paying to my friend. Regarding Principal, I am not at all worried about the same since my 80c investments have already crossed 1 lakh Rupees.

        One more query, is there any limit on the interest my friend can charge me for which I can claim tax rebate and also any restriction on the tenure


        1. Surinder

          Yes you can take the tax benefit on the both the parties .. but the overall limit will be 1.5 lacs only .. Also in order to take the tax benefit on your friends loan amount, you will require the same kind of documents which you get from bank like AGREEMENT for loan etc etc .. you can get the list from the conversation in this comments section , i think someone talked about it in detail

          Also there is no limit your friend can charge you , its based on your mutual agreement , but it would be a good idea to take it from friend because he can earn good return and you can also get it lower than bank


  183. Ramesh says:

    I have taken a property soley registered in the name of my wife. Both of us are earning. We have taken a loan where i am the primary applicant and she is the co-applicant. Bank will issue certificate on both the name. ECS is done from my account. Now my concern is :-

    1. Am i eligible for tax benefit?

    2. Is my wife eligible for tax benefit ?

    3. If i am not eligible for tax benefit then what is the solution?

    4. If my wife is not eligible then what is the solution ?

    Please suggest. Your suggestion will be of great help. Thanks for your help.


    1. Ramesh

      1. No , the property has to be registered in both of your name, only then you can claim the tax benefit

      2. Yes, your wife can avail tax benefit , in the ratio of the loan repayment

      3. There is no solution other than getting the house registering in your name also

      4. She is eligible


      1. Ashal Jauhari says:

        Dear Ramesh, in addition to what dear Manish has told you, please ask your wife to transfer her share of EMI everymonth to the account from where the EMI is paid out. As on date – practically only your wife is the owner & eligible for tax benefit. So to claim the same she should also pay her share of EMI.



  184. ashif khan says:


    1. Ashif

      You can claim the tax benefit on the loan taken for construction , what is the issue ? Where are you stuck ?


      1. ASHIF says:


    2. Ashal Jauhari says:

      Dear Ashif Khan, you may claim the 80C benefit on the repayment of loan. For the interest benefit upto 1.5L Rs. you w’d have to wait till the completion of your house.



  185. Ashal Jauhari says:

    Dear Mihir, as there is no loan taken for the property, the question of principal repayment does not arise hence you can’t claim any tax benefit for the amount directly paid to the builder by you.



  186. Mihir says:


    I have booked a house which is under construction. I have not taken any home loan. I am paying the builder directly using monthly installments without any interests. I have MOU with the builder as proof. Can I claim the amount I am paying each month as principal amount for tax deduction?

  187. Nitin says:


    Thanks for the detailed explanation.

    I am however now confused. I was under the confusion that you can get tax deduction for under-construction flat only for Principal under 80C.

    I booked a flat in December 2009 which is still under construction. I was able to show Principal under 80C and get tax benefit. I confirmed this from HDFC Bank as well as from company CA and they all told me that Principal could be shown before possession but Interest can’t.

    All of my friends are also taking tax benefit for Principal.

    Can you please confirm.


    1. Ashal Jauhari says:

      Dear Nitin, for under contruction property, you may claim Principal repayment benefit under section 80C. For unclaimed interest part, you may do so after getting the possession in 5 installments of 20% each starting from the FY of possession within the over all ciling of 150000 Rs. for self occupied house & without any limit for rented property.



    2. Nitin

      Do you have the certificate of possesion ?

  188. Shekhar says:


    I am a salaried person and borrowed a home loan of Rs 1500000 for a home and I am paying EMI. But the home get registered in mother’s name. Am I eligible for tax benefit.

    1. Ashal Jauhari says:

      Dear Shekhar, as you are not the registered owner of the house in question, you can’t claim tax benefit for the home loan taken by you.

      Please do note, ownership of the property is precondition to avail any tax benefit.



    2. Shekhar

      No , it has to be on your name to claim tax deductions


  189. Karthik says:


    This was a very helpful post. I had a quick question on the registration charges and stamp duty paid for getting the house.
    1) Can this cost be deducted from the taxable income?
    If so how do we submit proof of the amounts paid and under which section do we get rebates.

    2) I am getting a flat under construction registered , will this be sufficient to claim tax benefits in the current financial year itself or do I need to wait till I get a possession certificate?

    Thanks for the answers in advance.

    1. Karthik

      1. Yes, but only in the year of purchase of house

      2. You will have to get the possesion certification if you want to claim the deductions, else you cant


  190. Balakrishna Y. V. says:

    Hi everybody,
    I’m Balakrishna. I recently got home loan of 21 lakh from Axis Bank all at once (single disbursement) to buy a completed house. Now bank is asking me to pay only pre EMI interest (about Rs. 18000) for first month. But i’m insisting to start EMI (about Rs. 32000) from first month itself so that i’m able to pay a part of my principal amount also for which bank is not agreeing.
    Can any one please clarify me the following.
    1. Is pre EMI interest also applicable to complete disbursement of loan in one go?
    2. If bank insists for payment of pre EMI, where can i complain about it?

    1. Ashal Jauhari says:

      Dear Balakrishna Y. V., Please post details of your loans say interest rate, EMI date, Term of loan…. It seems bank is asking for payment of interest of part period. Please confirm.



  191. Ashal Jauhari says:

    Dear Anurag Jain, you can’t change the ownership every year based up on your own tax benefit level. This is the direct answer to your query.

    Regarding prepaying again no matter who is going to prepay, the home loan principal amount repaid ‘ll be equally divided between you & your wife.



    1. Anurag Jain says:

      Hi Ashal

      Thanks for your response.

      I do not intend to change the ownership. What i meant was that both of us are co-borrowers and 50% co-owners. Last year, I got 50% benefit due to shared ownership; and becasue my wife did not have enough taxable income, she did not have to claim the benefit (which she could have claimed, if required).

      This year, she will have a lot of taxable income, and hence we will want to avail the home loan tax benefit for her too. So, what I wanted to know is if it is a compulsion for her to actually pay the EMI/ Principal from her bank account ? Or, she is eligible to claim 50% benefit even if I make the payments from my bank account ? Thanks Again.

      1. Ashal Jauhari says:

        Dear Anurag, Let me clarify my prev. reply. As you have claimed 50% benefit last year, this year too the ratio ‘ll remain same. What I mean was – every year you can’t keep changing the benefit ratio say 40-60, 50-50, 60-40. Once you people opted for 50-50, It ‘ll remain so.



        1. Anurag Jain says:

          Dear Ashal

          I may not have made myself clear enough. My question is not regarding the share / ratio. We will calim 50% – 50% benefit only, for sure.

          I just want to know if the EMI payment / principal payment should go from my wife’s bank account, or it can go from my bank account ?

          If I bear the complete EMI payment from my income, my wife will get the tax benefit, right ? As she is the co-borrower and co-owner…. (but not paying any EMI from her income)…

          1. Ashal Jauhari says:

            Dear Anurag, For the first house where your wife is claiming the tax benefit, it’s advisable to pay EMIs from her account or from a joint account. In case the ECs mandate is from your single account, make sure every month, your wife is paying her share of EMI to your bank account to be adjusted against the EMI amount.

            To avoid any future hardships from the income tax department, it’s advisable to have her own income & repayment also in the loop.

            As of now, for claiming Income Tax benefit, no proof is required to prove the authenticity of payment done for the claimed home loan from own account. But in case if your’s or your wife’s case is selected for scrutiny, you may be in trouble to prove the authenticity of your claims.



  192. Anurag Jain says:


    I have a home loan where-in my wife is a co-borrower and co-owner in the property. I have been paying 100% of EMIs and was allowed only 50% benefit last year because of part ownership.

    This year, my wife will have higher taxable income, and needs to claim some tax benefit. Please advise which one of these is feasible and/or correct..

    1) Pay 100% EMIs for 6 months from wife’s bank account and both of us get 50% benefit based on certificate issued by Bank.
    2) Lump-sum Principal re-payment from wife’s bank account. She gets 100% benefit under 80C for the amount pre-paid.
    3) No need for wife to pay any EMI / principal from her bank account. By virtue of being a co-owner and co-borrower, she can claim 50% benefit irrespective of whose bank account the repayment goes from.

  193. Sonia says:

    Hi Manish,

    I don’t understand what is meant by possession? I have got a share certificate from my builder. Since it is a small builder, he will be allotting the house via lucky draw later in the year once construction is complete. Can I claim tax deduction based on the share certificate I have?


    1. Ashal Jauhari says:

      Dear Sonia, Possession means the building is now ready for use & after the possession certificate, you are now using (or may use) the building. Normally the possession certificate is provided only after getting clearance from local municipal body for sewer & gutter connection, water connection, Electrical connections etc.



  194. asim says:

    If you get possession 3 years or more after the home loan disbursement date ,it appears that you will not get benefit of tax deduction on the interest paid. There seems to be ambiguity on this. why should customers be penalized for builders fault? On one hand ,there is delay from builder and then you lose out tax deduction benefit. is there any solution? is the interpretation right?

    1. Asim

      As far as I know , thats the rule , not sure about the updated rule on this . Can you put your question on our forum : https://www.jagoinvestor.com/forum/


  195. Md Ismael says:

    Dear Manish
    All the points are new to me…I recently availed a home loan (which is under processing) for purchase of a new flat. My biggest motivation to buy a new flat was to get tax benifit on interest part which i thought i would get instantly . As tax benifit under 80C hardly matters because for initial years principal amount is extremely small. To add to this i do not plan to hold this flat for 5 yrs (its just an investment) which concludes i wont be able to get tax benefits on the interest part at all: this defeats the very purpose of me buying a new ….lets just hope the property prices atleast increase!!!
    Thanx a lot manish for such great articles…I have just started reading them and will definitely be a follower.

  196. Uday says:

    Hi,I would like to know if I borrow an amount from my relative and not from a bank , for purchasing a house , Can I avail the tax benifit on the same.In this case what are the documents required to be furnished during tax returns .Pl advice

    1. Uday

      Yes you can avail the tax benefit , but only on interst part , not on principal , which I feel is ok ! . Documents would be same as required in case of loan with bank


  197. Sachin says:

    If I sell an unoccupied investment property for which I have a loan, after 3 years, is the interest paid on home loan deductible from the capital gains.

    I understand that CII is applicable but can the huge amount of interest paid be used to offset the gains?

    1. Interest can be claimed only on per basis . I dont think it can be offset it the profit made out of sell . Why did you think like that ?


  198. Amit says:

    I have two properties in my name, one in my native place NP and other in my current work place WP. The NP home is occupied by my parents and I am not receiving any rent for that. The WP home is occupied by me and my family. I have availed loans for both the properties which are still running.

    My questions are
    1) Can I show both the properties for tax exemption on interest part (since both are self-coccupied)?
    2) As I understand for one of the properties I need to consider notional rent as income and show it appropriately in income section. My query is can I show WP property under this scheme as it saves me more tax in this case.
    3) How do I calculate notional rent, if at all I have to.

    1. Amit

      1. For the second house, you will be able to claim interest , but legally you will have to assume a rent which will be notional .
      2. No , WP is occupied by you . You can show the notional rent for NP only
      3. No idea on that .

  199. Maanasa says:


    I am new to finance management. I just have a question as can we delcare personal loans taken in any of the sections of income tax for saving tax deduction. Please help me out.


    1. Maanasa

      No , you dont get any tax benefit on personal loan


  200. SUMAN says:

    @ mANIsh and others

    Temme wat if the buyer take loan and go for buying a flat .
    So until he occupies the flat ,is it so that he wont be able to get tax benefit under 80C and 24?

    1. Suman

      Yes , its clearly mentioned in the video . He wont be able to claim 80C , but interest part will be available later in 5 parts after possession


    2. Ashal Jauhari says:

      Dear Suman, Please check the following link –


      For Sec. 80C benefit of home loan repayment, possession of house is not compulsory but for interest benefit under section 24 yes possession is a prerequisite.

      For most of the salaried class people, The home loan benefit (both 80C & 24) at source means a lot & most of the time, it’s the employer (account department people) which demands the possession certificate to provide any relief from TDS at source.

      In my view, the moment you start repaying home loan in your EMI amount, the section 80C benefit is due to you.



      1. asim says:

        Dear ashal if you get possession after 3 years due to builder’s delay , cant you claim benefit on the interest payments that will be making to the bank?


      2. Manish Verma says:

        hi Ashal/Manish,

        “In my view, the moment you start repaying home loan in your EMI amount, the section 80C benefit is due to you.”
        Please throw some more light on it. I am paying EMI’s for home loan taken in December 2009. The house is under construction on my ancestral land in my village. I know I can not claim interest related deduction right now, but can i claim principal related deduction under sec 80 C? my company accounts guys told me that i need possession certificate to claim both benefits. Secondly, as the house is in a village and does not fall under any municipality/town planning area, how am I supposed to produce the possession certificate? what will be termed as completion of house? I mean is it in terms of complition of construction work (even if some minor finishing work is pending) or is it related to the final installment of loan that one receives from the bank?


  201. Milind Kotibhaskar says:

    Thanks a lot Ashal. That wsa very informative reply.

    1. Ashal Jauhari says:

      Dear Milind, It’s nice to know that my post was helpful to you. Please fell free to post your queries.



  202. Milind Kotibhaskar says:

    Dear Manish,
    I have 2 queries:
    1. At present, yo can have 2 houses in the same town and you can get tax benifits on both the houses on the loans taken. Now is it true that as per DTC, you will get the tax exemption only if you have second home in another town and if your second home is in the same town you will not get any tax exemption?

    2. Suppose I have a house on my name and I buy a second house in the same town with my wife ( who has much less income than me ) as first owner and myself as co-owner. Can I claim 100% tax deduction on my income ( my wife ia anyway out of tax bracket so she does not need it. )on the loan token with myslf as co-borrower?

    1. Ashal Jauhari says:

      Dear Milind, Here are answers for your query.

      1. There is no such limitations in DTC. One may have any no. of houses 2-3-4-5-……. in the same city & may claim home loan interest benefit all houses. Just like present situation, after declaring one house self occupied, all other houses’ interest can be adjusted against the rental income from such houses.

      2. Tax benefit on the 2nd house ‘ll depend upon the ratio of ownership between 2 of you. Interestingly as you are already claiming your first house as self occupied, the 2nd house can be claimed only after showing rental income from it. If you may prove that your wife’s name is for merely ease of ownership for later years (she may sell easily if you are not alive) & all the money paid as down payment as well as EMI pmt. is from your own sources, you may claim full interest (with out any limit of 1.5L Rs. for self occupied house) benefit adjusted for rental income from the 2nd house.



      1. Thanks for the answer Ashal , Even i learned from it 🙂


      2. Dishant Verma says:

        do u mean that 1.5 lakh limit is just for 1st house and not for 2nd, 3rd and so on ?

        1. Dear Dishant, the 1.5L Rs. limit is for self occupied house. If you are having more than 1 house, the other houses’ full interest can be availed considering the rental income is reported from such houses.



  203. Tarun says:

    I have taken loan for a house which is under construction. Construction is expected to complete by September 2012. I am paying only the interest part as of now since last may 2010.
    Now, to claim the interest exemption (after possession of the house) for the interest paid before possession, what all documents i need. Does bank issue some certificate for the interest paid on under construction property?


    1. Tarun

      Yes , Bank should be giving you the statement or the reciept of the payment you are making , kindly ask them


  204. Amit says:

    Thanks Manish and Ashal….

  205. Amit says:

    Manish and Ashal,

    How and what you think would be the senario once the DTC is implemented? Will there be no HRA exemption ? Will there be no exemption on principal repayment?
    For me it appears with DTC, it would be big loss to salaried people who are staying in metro or semi metro and paying huge rent.

    1. Amit

      Yes HRA will go away with DTC coming in . I have to look again regarding Principle payment .

      Yes it would be a blow to salaried class , but the compensation is low slabs .


    2. Ashal Jauhari says:

      Dear Amit, no need to panic yet for DTC. It’s merely proposal as on date. Let the parliament pass it as an Act. there are many slips between cup & your lips. As rightly pointed by dear Manish, the redrafting of tax slab is the benefit in exchange of some other benefits like HRA, Home Loan Pr. etc.



  206. Ramesh says:

    Hi Manish,

    Very nice article. I am a regular follower of your articles. I have query regarding this section 24. I am currently construction house and I have taken a loan of 25 lacs from SBI and my father is giving another 7 lacs to complete that. Since there will not be any agreement between a father and son , can I make it an agreement and claim by proving interest to him to claim the deduction under section 24. Can I claim both SBI and loan I take from my father for tax exemptions.

    Real kudos your great articles.


    1. Ramesh

      Yes , you can claim upto 1.5 lac in total from various sources of loan

      1. Dishant Verma says:

        Manish, does this 1.5 lakh includes principle amount or just interest ?

    2. Ashal Jauhari says:

      Dear Ramesh, As you are already taking 25L Rs. loan from SBI & another 7L Rs. from your father, the total interest outgo ‘ll be higher than 1.5L Rs., the limit for self occupied house.

      In my view, to maximize your income tax benefit, you should consider the deemed rent option if you want to live in this same house. In case you are going to put this house on actual rent, show the actual rent received in place of deemed rent & get the maximum possible income tax benefit.



  207. Atul says:

    Hi Manish,

    Thanks for the valuable information.

    According to you pre-EMI Interest only can be claimed once property is registered and occupied. For example, house will be occupied when full loan disbursement is done . That means full EMI starts. Can one claim both Pre_EMI and regular EMI Interest at the same time.

    BTW I know lot of cases in Bangalore where people get the property registered midway and use that document to claim full Interest and Principal payment exemption.



    1. Atul

      I am not sure why you are using the word “pre-EMI” , are you reffereing to EMI paid only for the interest part ?


    2. Ashal Jauhari says:

      Dear Atul, Yes pre EMI interest coupled with normal interest upto 1.5L Rs. for self occupied house & unlimited for rented house ‘ll be available for set off. Please check my reply to Dear Pravin.



  208. pravin says:

    does the PEMI/5 +Current year Interest rule apply for rebate on second homes too? ofcourse adjusting for rental incomes and taxes paid?


    1. Pravin

      yes it should be, anyone can answer this ? I got confused 🙂

    2. Ashal Jauhari says:

      Dear Pravin, Yes you may claim pre EMI interest @ 20% rate + normal interest of running FY for the rented 2nd house adjusted with rental income. I’m producing an example for you.

      A. Pre EMI Interest = 200000 Rs. (adjusted 20% = 40000)
      B. Current FY Interest = 250000
      C. Annual Rent received or deemed = 120000
      D. Property Tax paid to civic authorities = 20000
      E. Annual Net Rent = C – D = 100000
      F. Standard deduction = 30% of D = 30000
      G. Net Taxable income from house property = E – (B + 20% A + F) = 100000 – 320000 = -220000

      As the G above is a loss, it ‘ll be available for set off against salary income.

      I hope the above example ‘ll solve your query.



  209. brijesh says:

    Hi Manish – eye opener there!
    I had taken a home loan in july 2009 for 12 lacs – for a house which is being constructed and will be ready for possession in 2011-12
    I have been paying EMIs since Aug’09
    My question is: will I not get tax rebate on both principal & interest for this financial yr 10-11

    Thanks in Advance

    1. Ashal Jauhari says:

      Dear Brijesh, As the possession of house ‘ll not be there with you till 31st march 2011 in the current FY 2010-2011, you can’t claim any benefit be it on principal or interest.

      In next FY i.e. 2011-2012 as you ‘ll get the possession, you may claim full principal of FY 2011-2012 & full interest of of 2011-2012 coupled with 20% of the total interest paid till 31st march 2011, within the over all ceiling of 1.5L Rs. for the self occupied house.



      1. Ashal

        Thanks for answering, I had a talk with brijesh on phone today itself ,and answered his doubt 🙂


      2. Dishant Verma says:

        ashal , is ceiling of 1.5 lakh applies to interest only or (current interest+current principle+20% of old interest)

        1. Dear Dishant, the ceiling of 1.5L Rs. is for interest + 20% old interest. Principal comes under the limit of 1L Rs. of section 80C & thus it’s not counted with section 24(b) benefit on interest.



          1. Dishant Verma says:

            Thanks for the prompt response. I learnt a lot of things.

  210. Shobha says:

    Hi Manish,

    Thanks a good article as always. Was not aware of 2 & 3.


    1. Shobha

      Thats good to hear . Keep reading 🙂


  211. Vijay says:

    Good article Manish. I was not aware of Point 2 that is a new learning.

    1. Vijay

      I am glad you know more now 🙂 . please spread the word !

  212. Ashwin says:

    Hey Manish,

    If I am not mistaken, isn’t the interest deduction for loan taken for repair/reconstruction of the existing house restricted to 30k and not 150k as you put in point 4?

    1. Ashwin

      Thanks for raising this point ,you are correct . The limit for interest deducations for loans taken for repairs etc is 30k , but only for self-occupied house . For let-out properties , there is no limit


      1. Ashwin says:

        Also I would like to add:
        The total limit for the interest deduction for the self occupied house is 150k, that includes pre EMI/5 + interest paid during the financial year for loan taken for construction + interest paid for repair/reconstruction during the year (subject to 30K limit).

        So if a person is having a existing loan if he takes a further loan for repair the interest although restricted to 30k should come within the overall 150k limit and not outside it.

        Thanks for the article.

        1. Ashwin

          Thanks for adding this point 🙂 .


  213. BHARAT PUROHIT says:

    Dear manish,

    Nice article in simple language. I have one query. pl. look in to it.

    Query : I have taken home loan in 2005 and i am showing it as investment proof every year to save tax. I have taken 1 lac rupees personal loan in 2008 for home renovation. Can i claim this for tax savings? (My annual EMI for this Personal loan is = 3500 X 12 =42000. including interest.)

    1. Bharat

      Personal Loan = NO TAX DEDUCTION


  214. Santosh Navlani says:

    good ones Manish. never knew about them. guess, people who are salaried & are mobile or not settled in 1 city, has a lot to take home from this, esp. people who start their careers & plan to take home loans too early in their careers w/o thinking the impact on their cash flows.

    1. Santosh

      Yes , thats true .. Knowing these rules will obviously help some one plan their finances and optimise it , as I read above , someone had taken the loan from his father , but didnt knew that he can claim deductions , its a 45k loss incase his interest was 1.5 lacs and he belongs to 30% bracket .

      Just imagine, 45k loss just because you didnt educate enough ! Big price to pay for ignorance !


  215. Srinivas says:

    I know 1,3 and 4 and partly 2.

    Used point 3 to my advantage.

    I have a doubt on the capital gains on house property issue. My friend has two properties(Banglows). He wanted to dispose one of them and reinvest the capital gains in a new property. Will he be able to avail capital gain reinvestment benifit if he has another house.

    There are various openions put forward by various sources. Would like any expert to throw some light on this.


    1. Nagarajan says:

      My dilemma is also similar. If i sell my house less than 5 years of purchase and immediately reinvest in another property, am i still liable for cancellation of tax benefits under 80 c.

      1. Nagarajan

        Yes , even in that case your tax benefits on 80C is revered , reinvesting in another property will only help you save the tax on the capital gains .


    2. Vikas says:

      How do you define family? Is spouse also included in ‘family’?

      Also, though it is obvious but would the interest payout get added to the income of the lender?

      1. Vikas says:

        @ Srinivas,

        Sorry, did not give context. You mentioned that you had used point 3 to your advantage. Hence…

        How do you define family? Is spouse also included in ‘family’?

        Also, though it is obvious but would the interest payout get added to the income of the lender?

        1. srinivas says:

          I took lon from my father and getting exemption for the interest i pay.


        2. Vikas

          I dont think “wife” will be considered as someone from whom you can take loan from . Father and Son , Mother and son , friends etc can live seperately , but how do you explain that you and your spouse are not same (2 jism 1 jaan) I mean to say 🙂 .

          You can claim deductions from the loan taken from brother or father who is living with you , but not the spouse , it does not make sense 🙂 .

          I hope you agree with me , note that my comment is based on logic and not any proof , we need to still find it out !


        3. Ashal Jauhari says:

          Dear Vikas, In case of obtaining full or a part of home loan from a private source like friend or relative (family member, even spouse), the interest paid to these pvt. source ‘ll be available for dedection under section 24 for the borrower. On the other hand, the interest ‘ll be added in the income of the lender & ‘ll be taxed as per his/her marginal income tax rate.



          1. Ashal

            Thanks for the answer 🙂


    3. Srinivas

      Yes , he will get that benefit , The usability of capital gains to buy another house and save tax on that has nothing to do with the number of properties you have , where did the confusion arise out of , give me the link


      1. srinivas says:

        I researched on net. There is no clear explanation for it(May be this case is not encountered very often). One FP who my friend approached also told me the same(That my friend will not be able to use CG on sale of second house).

        1. Srinivas

          Yes , dont get confused on this . Its a well known rule that selling the house before 3 yrs will mean that you have to pay tax on profits , no other alternative . Better to sell it after 3 yrs .


  216. Ajay D says:

    Nice article…. as usual…
    I was aware about point 1 but not rest of the 3 points.
    I have 1 query on point number 3, What proofs do I need to submit to get tax benefit if I borrow money from family member for purchasing house?

    1. Ajay

      Its the questions already asked by some person above , I will find out and come back


  217. rajeev says:

    Point 2 & 3 was not known to me, thanks Manish
    Are you planning to compile these info in some categories as would be really great reference material whenever required.


    1. Rajeev

      Thanks , Is the info not in compiled manner already ? What do you mean by “compilation” here ? explain ?


  218. T.S.ASHOK says:

    Hi Manish,
    I think we can claim the principle also for the under construction house provided our house will be handed over to us within the financial year(before march 31st.).

    1. TS Ashok

      Yes , if you can get the possession in a particular financial year you can claim the deductions for that particular year .


  219. Bharti Amin says:

    Can we claim rebate on the principal amount of home loan for under construction house which is being built on my own residential plot?

    1. Bharti

      Thats really a tough one , I will find out and come back .


    2. Ashal Jauhari says:

      Dear Bharti, For under const. house on your own residential plot, you can claim principal benefit only after getting the occupancy certificate (also known as Building Use permission) from the civic authorities. Bcoz in your case, there is no builder which ‘ll hand over the possession.



      1. Ashal

        Nice . That makes sense . It has to come from govt authrity .

        Bharti can claim the interest part of tax deducation in the same way , right ? thats 20% in each of 5 consecutive years.


        1. Irshad says:

          My friend is in similar situation where he is planing to start construction on his site in April 2011 and will finish it by Dec 2011. And will get the occupancy certificate (also known as Building Use permission) from the civic authorities in Dec 2011.

          So, will he be able to avail 80C and Interest benifits in Financial year Apr-11 to Mar-12?

  220. Jayaprakash Kanreddy says:

    I know about point 1 only all other 3 are new to me. Even point 1 is partially new to me, which claiming interest part in next 5yrs.

    Another point I want to add. You get home loan as a co-borrower with your parents or wife and house is not owned by you. You will pay the EMI completely, but you cannot avail tax benefits here.

    One of my friend in the same state, his father owns house and he is retired so bank allowed him as co-borrower and gave home loan and my friend is paying all the EMI. He cannot get tax benefits here neither under section 80C or 24.

    But this is india, if you are paying home loan and bank gives you loan certificate then you can show it for income tax, no one will ask you to show the documents of the property.

    1. Jayaprakash Kanreddy

      One will be allowed to avail tax benefits for the part of house which he is owner for and paying the EMI , so if a person is co-owner and co-borrower for 50% part and also he is paying 50% EMI , he will be eligible to claim the tax deducations ..

      In your friend case , he is co-borrower , but is he also co-owner ? If not , then he cant claim tax deductions .

      The first rule for claiming tax is , you should own the house , you should borrow the loan and also you should pay the EMI from your pocket .

      Let me know your friends case ?


      1. JayaprakashReddy says:

        He is not co-owner, but he is paying the entire EMI from his pocket, hence he is claiming it. Though it is not legally correct, but who will check this when he gets the certificate from bank that he is paying home loan.

        1. hmm.. yea if he has the right documents , thats the only thing he requires to claim the deductions 🙂


  221. Abhishek says:

    I think for an under construction house, we CAN claim the tax rebate on the principle amount upto Rs 1 Lakh under 80 C. For claiming tax rebate on the interest part we have to show possession. Correct me if I am wrong.

    1. Abhishek

      We need to show the possession certificate to get tax benefits , how do you get possession of a under-construction house ? Explain ?


  222. Kaushik says:

    Can you elaborate on loan from Family/Friends. I mean what are the paper works and documents needed to show to claim deduction on the interest amount. I took some loan from my dad for my home and I did not know about this option. Now that this is possible I want to see if I can avail this benefit.

    1. bapu ghandat says:

      i have also same problem? how can we show this intrest payment to goverment and componey where i am working now???

    2. Kaushik/Bapu

      It should be almost same documents required , and even the right of the lender should be same as the bank , but this is more deeper in legality so better to hire a lawyer for this .


  223. Anand says:

    This is regarding the interest portion of under construction house.

    It is said that interest can be claimed later in 5 years; but what if interest of the home loan in the next 5 years already exceeds 1.5 lakhs?
    Then where to accommodate the interest during under-construction phase?

    1. Anand

      Thats the limitation actually . No matter what your total limit for interest is only 1.5 lacs .


      1. nitin kanyawar says:

        Dear Manish,

        Does it mean tht, say suppose my interest part is already above 1.5L , than the accumulated interest prior to possession of house i wont get any benefits for that.
        e.g till possession 5L was the interest accumulated, now dividing it under 5 installments it comes to 1L per year. But for those 5 years the actual interest is already 2L , will i get 1.5L for tht year + 1L of accumulated interest or only 1.5L, in case of the later there seems no benefit for rate flats under-construction since then both principal & interest exemption is lost.
        hope to hear from you.
        – Nitin Kanyawar

        1. No , in that case you wont get any benefit more than 1.5 lacs. This provision is only helpful when interest is lower than 1.5 lacs otherwise, so that by adding old interest rate you can claim upto 1.5 lacs deducation !

      2. Deepesh says:


        I see your responses here which are really a great help to the people in doubts. I have the following query and would appreciate if you could help me.

        1. I have an under construction Flat in Noida and for that I am paying EMI and also claiming it to save the income tax.
        2. I am living in Pune on Rent so claiming HRA as well.
        3. Now I have booked another flat in Pune and yet to apply for the home loan. This flat will be completed in October, 2015.

        So I just want to know how can I claim the Tax saving on both the Under Construction Flats and also the HRA as I am still living on Rent.

        Thanks !!!

        1. You dont have to do anything special to claim both . JUst do your tax return in same manner like you did always . Take help of a CA on this

  224. allthecrap says:

    I think I didn’t know any of the points. Good one Manish.

    I have a query:

    Ex : Ramesh buys a ready house at X amt and pays the EMI to a bank . Now instead of living there he rent it out and continue living at his parents house.

    Now what are the tax implications? He will claim tax saving under 80c and 24. And the rent will be added to his source of income. Can he claim HRA as he used to do before he bought the house?

    Basically my question is what is the best strategy in this scenario? How to minimize the tax.

    1. allthecrap

      Yes , he should be able to claim 80C and interest under 24 , and his rent will be added to his income .

      regarding HRA , he might not recieve it only if the house is in the city limits, but if its a different city , he can claim it.

      So he has to do comparitive analysis on which option will give him best tax saving , He can pay the rent to his father and claim HRA


    2. Ashal Jauhari says:

      Dear Friend, for your given example of Ramesh, if the home loan interest is higher than 1.5L Rs. then only it’s beneficial to claim both benefits of \hra as well as home loan.

      As Ramesh is declaring rental income from the house, he can very much enjoy the hra benefit also even if both houses are in same cities.



      1. allthecrap says:

        Thanks Manish and Ashal.

        @Ashal ” if the home loan interest is higher than 1.5L Rs. then only it’s beneficial to claim both benefits of hra as well as home loan.” Can you explain that.

        Regarding the within city or out of city. Who is correct Manish or Ashal?

      2. Ashal

        As far as I knew , there is some rule that the house you own should not be within the permissible city limits to claim if you want to claim HRA incase you are living in some rented place ? Is that incorrect ?


      3. Ashal Jauhari says:

        Dear Allthecrap, As you are already aware that the self occupied property interest deduction is limited for 1.5L Rs. whereas for rented one, there is no limit. So for Ramesh, if the interest is more than the 1.5L Rs. self occupied limit, then only the rental income ‘ll be beneficial for adjustment.

        Dear Manish, In case of house & rented accommodation in same city, home loan & HRA both benefits are possible if the house is declared as self occupied but the condition here is – there should be a reason to live on rent, say work place is far away from the purchased house or the locality is still developing & all the civic facilities are not available. On the other hand for ramesh, as he is declaring rental income from the house & not claiming self occupied, he is free to claim HRA benefit also as the person can not live in his own house which is already rented to else one. Hope this ‘ll clear your doubt.



        1. allthecrap says:

          Thank Ashal and Manish. 🙂

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