### House Ownership and loan exemptions

POSTED BY ON May 24, 2013 11:04 am COMMENTS (11)

Hi,

Only my father owns our current house ( Where our family lives).

Now my mother,father and myself purchase a another house(Resale), will it be treated as second house for all of us ? ( As my mother and me are not owners of current house) & get exemption for all interest ( no limit of 1.5 L) after declaring it as let out (rented)?

To ask for exemption through loan EMI does one has to be a “co -owner AND co-borrower”  or any one of them i.e a “co -owner OR co-borrower” ?

## 11 replies on this article “House Ownership and loan exemptions”

1. Dear Anand, interest certificate given by bank is the document needed to claim tax benefit.

No, all the maint. expenses are covered in that 30% stand. deduction. no matter your actual expenses are lower than this 30% or higher than this 30%.

The actual Municipal tax paid by you ‘ll be available for deduction.

thanks

Ashal

2. Dear Anand, Here goes the calculation for your father.

A. Yly Gross rent = 10000*12M = 120000
B. Municipal taxes paid = 5000
C. Adjusted rent = A – b = 115000
D. Standard deduction @ 30% of C = 34500
E. Net rent = 115000 – 34500 = 80500
F. Father’s share in the rental income = 1/3 part of 80500 = 26800 Rs. or almost 27000 Rs.
G. Interest paid on home loan by father = 23000*4M = 92000
H. Income from house property for father = 27000 – 92000 = -65000 Rs.

So for you father, the loss ‘ll be 65000 Rs. available for deduction against his saary income.

For your mother & you it ‘ll be 92000 Rs. each.

Thanks

Ashal

1. Anand says:

Hi Ashal thank for calculations and explaining it.

And what documents we need to have from housing financer to avail these exemptions ?

Also can we subtract the cost of tenant agreement from it or is it included in 30% deductions ?

Now here, this municipal tax amount was half yearly, so we can reduce the amount as much paid to municipal corp right ?

3. Anand says:

Hi Ashal,

Thanks for your efforts for providing us the calculations.

The municipal taxes are around 5000 for half year and the maintenance cost is around 1200 pm.

4. Dear Anand, what’s the municipal tax for the property in question?

Thanks

Ashal

5. Anand says:

Hi Ashal, Thanks for reply.

Ok, Please give detailed calculations.

The expected rental value is : 10,000 pm.

6. Dear Anand, if all 3 of you ae 1/3rd parnet in the new house as well as loan amount, the same ‘ll be considered for tax benefit also. So out of the 2.3L Rs. interest, please convert the same into 1/3 part for each of you. Now for your mother & you, the interest benefit ‘ll be directly available. for your father, the notinal rental value ‘ll come into picture. Here again the 1/3 part of the rental value ‘ll be considered for him.

Rest calculation of 30^ deduction & all that i assume you are already aware, hence not repeating here. in case you want the detailed reply, please quote the rental value of the house.

Thanks

Ashal

7. Anand says:

Hi Ashal Sorry or late, there is no problem in disclosing the details.

Our current home which is in my fathers name is free of any borrowings.
The new home will be 1st home for my mother and me and 2nd home for my father.

Hence I would like to know whether the rental value of the new home will be considered only in my fathers income and at what percent? If we are repaying 33% of EMI each.

The loan for this home is 28.5 lacs. and for the first year 23,000/- pm will be interest and 3,400/- pm will be principal amount. Total tenure is 20 years.

Thanks.

8. Dear Anand, what is the interest in total from this 2nd property? What is the principal repayment? What are the details of fathers 1st home loan? I can not answer with out knowing the full details.

In case you want to keep the matter private, please mail me the details over my mail ID. Please contact manish@jagoinvestor.com to get my mail ID.

As per forum policy, I can not provide my mail id directly to you.

Thanks

Ashal

9. Anand says:

Thanks Ashal.

So me and my mother can have exemption for interest payment up to a limit of RS 1.5 L for each right ? and principal repayment limit of up to Rs: 1 L ( for all 3 of us) ?

And my father will not have any limit for interest re payment right ?

Also what are the standard deductions at 30% that are applied on the income received from house ? Like if monthly rent is 10,000 then can we have 3 k as maintenance and other charges( even if actual expenses are less)? And add net income of 7k / month to our other income section?

10. Dear Anand, the 2nd house is for your father. for you & your mother it’s first house. Accordingly all of you an claim tax benefit. To avail tax benefits, co-ownership is a primary requirement & of course one should be co-borrower too.

Thanks

Ashal

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