Home loan from father

POSTED BY Pankaj Vasudeo ON January 22, 2013 12:51 pm COMMENTS (14)

Hi there

Can I take home loan ( Rs. 700000) from my father and give interest to him

so that I can save my incometax 

my dad is retired govt servant under nill tax 

his pension is rs 18500

please let me know the rate of interest and what documents to made

14 replies on this article “Home loan from father”

  1. Dear Pankaj, No TDS is required.

    Thanks

    Ashal

  2. Pankaj Vasudeo says:

    hi there
    i am paying rs 7000 approx to dad for home loan
    do i have to cut TDS
    right now i have paid rs 14000 for two months

  3. Dear Pankaj, if it’s a rented out property, you can claim the interest benefit beyond the limit of 1.5L Rs. (this is the limit for self occuypied property). Yes the rental income ‘ll be added to your income.

    In case, you are not living in your house & it’s lying vacant, the maximum benefit ‘ll be this 1.5L Rs. interest. it includes that 20% interest carry over also.

    thanks

    Ashal

  4. Dear Pankaj, Please do note the interest paid by you for the transactions (read loan) done during current FY i.e. till March 2013, can be claimed for income tax benefit only after completion of your house contruction & it’ spossession with you.

    This gone by interest is available for 5 successive Fy from the first FY you start taking benefit in 20% each installments.

    Thanks

    Ashal

  5. Pankaj Vasudeo says:

    hmmm ok
    If I am not living there then
    bcoz its first property( I can take benefit of home loan) I am purchasing and I live in my parents house
    is it technically wrong

  6. Pankaj Vasudeo says:

    okay
    If i start construction in mid feb itself then
    bcoz after payment I have to do boundrywall
    and my date of payment is 30th jan 2013

    1. The date you actually start living in the house is what counts

  7. Pankaj Vasudeo says:

    Cost of land is rs 10,000,00
    I am taking loan Rs. 700000 ( father) and Rs. 300000 ( Brother’s wife) and will take Rs. 500000 additional loan from Brother’s wife for building 2 rooms and boundrywall after march 2013.
    Is it okay to claim interest benefit in incometax of two month ( feb 2013 and march 2013), because I will be constructing it after march 2013

    1. Dear Pankaj,

      Technically:
      The interest payable before start of construction work will be deductible in five equal annual instalments commencing from the FY r in which the house has been acquired or constructed.

      So assuming you complete the house and take possession in Dec. 2013 then the interest rate from feb 2013 to Dec 2013 can be claim in 5 equal installments starting from FY 2013-4 only

  8. Dear Pankaj, yes you can take loans for your hole purchase from one or all relatives mentioned by you. Please do prepare laon documents on 100 Rs. stamp paper.

    Please pay at least market interest rate to your father or any other reltive say 10% or 12%. You may keep low interest rate also, but in that case, your income tax saving ‘ll be very low for such low interest.

    thanks

    Ashal

  9. Pankaj Vasudeo says:

    I wanna ask few things more
    will ask within hours
    thanks for helping

  10. Pankaj Vasudeo says:

    thanks for quick reply
    I can take loan from mother, father
    or from family members like my own wife, brother, brother’s wife

  11. Dear Pankaj,

    only interest part can be used for tax deduction not the principal. The rate of interest has to something reasonable as fixed by your father.

    You need to get a certificate from your father stating the interest amt

    and you need proof for the cash flow

    loan from your father and payment of interest (both your bank records)

    pattu

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