I have a home loan of 30 lakh from HDFC. To pay off the loan, I plan to borrow ( @ 8% PA) from my real brother. I plan to pay back to my brother over the next 5 years. I have following queries on this - 1. What are the necessary documentation that should be done to ensure, no Tax implication on my brother for principal amount I will pay back? 2. Would I be eligible for tax benefits for home loan? Any other precaution that I should take? Thanks in advance.
Hi,
1. Just enter into a loan agreement with your brother. There is no issue. Interest will be taxable in your brother's hand. Principal will not be taxable.
2. Yes, you can claim interest deduction u/s 24. You will have to take interest certificate from your brother. You will not be allowed to take 80C deduction for principal repayment to your brother.
Hi,
Hope you are doing well!
1. You just simply enter into loan agreement with your brother. Principal amount will not be taxable.
2. Yes, you can claim interest deduction u/s 24 up to Rs 2 lakh and also take interest certificate form your brother.
However, you will not be allowed to take 80C deduction for repayment of principal to your brother.
Thanks & Regards,
Payal Chhajed
Nothing to worry here. Just have a simple loan agreement with your brother and you can avail Rs 200000 loan interest benefit. Do all transactions by banking channel. You brother will need to show interest income in his ITR.
Hi
You need to enter into a loan agreement with your brother.
Interest shall be a taxable income for your brother; no tax on principal amount repayments.
You can claim interest deduction under section 24.
Hi,
Please find below the answers to your queries:
1.You can enter into a loan agreement with your brother mentioning all the facts of the matter.
However, Interest income will be taxable in your brother's hand but there will be no tax on principal repayments.
2. You can claim interest deduction u/s 24. However deduction u/s 80c will not be available. Please enaure that all transactions are done using the banking channel.
Hope that clarifies.
Regards,
Nikhil.
Dear Sir,
1) You can obtain loan from your real brother @8%. Prepare an agreement with your brother regarding loan and its utilization, repayment conditions and interest percentage. Advise you to obtain it at minimum SBI interest percentage. Obtain loan either through ECS or Account payee cheque and not through bearer cheque.
2) You are eligible for interest benefit u/s 24 for Rs.2,00,000 for self-occupied property. Not eligible for benefit of Rs. 1.50 lacs u/s 80C.
I also provide services for ITR filing, GST filing and Audit at nominal charges. My email id is . You can text me to avail any of the above services.
Thanks
The loan obtained from your real brother to pay off the original home loan would be eligible for the home loan benefits. The interest on such loan from real brother would be eligible for deduction under Section 24(b) of the Income-tax Act.
However, the principal repayment made to Bank is available for deduction under Section 80C. Once you have repaid the home loan using the amount received from your real brother, such deduction would not be available in respect of the amount repaid for loan from real brother.
The interest earned @ 8% by your real brother would be taxable in his hands.
