• Income tax benefits on house loan interest

Hello Concern

There is two parts of questions related to my query related to income tax benefits on house loan interest repayment.

Situation - We had purchased a plot in Haryana from HUDA( Haryana urban development authority ) and taken the home loan for purchasing the land + constructing a house on it. 

1) Registry and all other documents are in the name of my 'Mother' so my mother is the owner of the house and the land but as she is housewife and does not have any earning source, to get the home loan we submitted my salary slips in Bank ( and loan is approved also in that way) 
Now, as I am repaying the loan, I want to claim the tax benefits but my organization denied because as per them " to claim the tax benefit, one should be the owner of the house " but I checked many websites and some of them say it needs not mandatory to be owner of house to claim tax benefits as I am the one in bank documents who is repaying for particular property.

Que - Please confirm, If I am eligible for tax benefit for interest claim on the property? 

2) If above situation stand valid, also let me know - Above property is purchased with collaboration with 2nd partner ( my mom + my aunt) in ration 50-50
My aunt does not claim tax benefits on the repayment, am I still eligible to claim 50% tax benefits on this? What is the maximum amount I can claim under tax benefits? 

It will be really thankful if you could come back to me either via phone - 9671471234 or email - amanaggarwal122@gmail.com
Asked 6 years ago in Income Tax

Hi,

Unless you are an owner in the property – you are not entitled to the tax benefits. There have been situations where the property is owned by a parent and the parent and child together take up a loan which is paid off only by the child. In such a case the child, who is not a co-owner is devoid of the tax benefits on the home loan.

So your organization is correct in denying the benefit to you.

You can initiate a Consultation and then we can discuss in details over phone.

Hope this clarifies.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Hi Aman,

My intent is not to confuse you as I just stated the law. If you are not the owner of the house, you may not be eligible for the deductions on the loan repayment that you are doing. However, if you still go ahead with claiming the exemptions, get an affidavit from your mother stating that the entire home loan EMI's are paid by you. Hopefully, that may help.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Hi,

In order to get tax benefits on the home loan obtained by you, it is no where stated that you need to be the owner of the house property.

Rather, what is important is that you should be the "CO-BORROWER" or "CO-APPLICANT" of the said home loan. Even a Guarantor or mere repayment of home loan from your income is not sufficient.

If you want to refer the section, go through Section 24, which says "Borrower" and "Borrowed Capital".

Hence, in order to be eligible u/s 24, you should borrow the money as home loan, which is possible when you are co-borrower or co-applicant.

As such, if in the said home loan you are regarded as co-borrower, you will be eligible to claim deduction u/s 24.

Further, since you occupy the house along with your mother, as per Sec. 27(iiia) read with Section 53A of Transfer of Property Act, you will be deemed to be the owner of that house.

Secondly, as far as 50-50 share with your aunt is concerned, you will be in any case eligible to claim your proportionate share of tax benefits, irrespective of the fact whether your aunt claims it or not.

I hope it is clear to you now.

Regards,

Sunny Thakral
CA, Delhi
224 Answers
8 Consultations

5.0 on 5.0

Dear Aman,

You can claim the benefit of interest on the housing loan availed by you even though the property is in the name of your mother (the concept is known as deemed ownership). You can claim benefit u/s 24(b) as interest of Rs. 2 lacs and deduction of Rs. 1.50 lacs as principal component u/s 80C.

Please check your e-mail as I mailed you the above reply before also.

Vivek Kumar Arora
CA, Delhi
4825 Answers
1030 Consultations

5.0 on 5.0

Hi,

You can claim u/s 24b however my advise will be to get an affidavit from your mother stating that all the EMI's have been paid by you. This will help you in future in case there are any queries from the IT department.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

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