• Purchase of property

My daughter and son in law wants to buy a flat for rs one crore and regiter with 50:50 share of title. My son in law wants to borrow from bank and daughter wants to invest from her savings and gift from me(earlier she was working and now for 3 year she has given up job)
1 for registering with 50:50 share should they invest equal amount
2 what are the tax benefits my son in law can claim
Asked 2 years ago in Income Tax

Hi,

- Yes for 50:50 share, both of them need to invest equally.

- Deduction of interest of Rs.2 lacs annually.

 

Thanks

Vivek Kumar Arora
CA, Delhi
4222 Answers
399 Consultations

5.0 on 5.0

Yes. For a 50:50 share, the investment should be equal. Your son in law will be able to claim Inr 2 lakh interest deduction benefit.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

No it's not necessary to invest 50:50 amount to have 50% share, but then your daughter won't be able to claim any deduction like deduction of interest on loan or stamp duty she would only be able to claim the share she actually invested and it would complicate things so it's better to show the share she is going to invest or to show it as loan by your son in law to your daughter (for the amount falling short of 50% share) and let the share be 50%.

Your son in law would be able to claim deduction upto 2 lakh as interest on home loan.

Deduction under section 80C for the principal amount repayment of home loan.

Deduction under section 80C for the stamp duty and registration charges paid.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
3875 Answers
51 Consultations

5.0 on 5.0

Hi

 

1. Ideally, equal investment is required. However, it can be mentioned in the sale deed that both the co-owners shall have equal rights in the property and the consideration shall be shared equally when the property is sold irrespective of the investments made.

However, for capital gain purposes, when the property is sold in future, respective investments shall have to be considered.

 

2. Available deductions are:

  • Section 24 deduction for interest paid on home loan- max 200000
  • Section 80C deduction for principal repayments of loan and stamp duty payment- upto max limit of 80C I.e. 150000

Please note that the deduction of stamp duty shall be available to that co-owner in the year of payment who actually pays it.

 

 

Lakshita Bhandari
CA, Mumbai
5557 Answers
649 Consultations

5.0 on 5.0

No not necessary.(For ex: Your son in law will gift deficit money to your daughter & they will register it at 50:50, that money will still belong to your son.)

Your son in law can claim Income tax deduction of Principal Repayment of Home loan as well as interest. (Cheapest loan available in Market is home loan, along with that you get deduction in it. Thus if he is in business than he should consider taking the maximum loan that he is eligible for as home loan.)

 

Yes he will be eligible but your daughter will be included in it as co applicant since she is co-owner.

 

Chirag Maru
CA, Raipur
207 Answers

5.0 on 5.0

Dear Sir,

 

 

Joint holders can claim the maximum tax benefits individually. This means each holder can get a tax rebate of Rs. 1.50 lakh for principal repayment under Sec 80C and Rs. 2 lakh for interest payment under Sec 24.

 

The tax benefits are applied according to the proportion of the loan taken by everyone involved in the joint loan.

 

For e.g. if the ratio of ownership is 70%:30% then the loan amount of 50 L will be split as 35 L and 15 L respectively and interest/principal applicable to the respective amounts will be taken into account for each individual taking the loan.

 

For claiming your tax, it is best to  procure  a home sharing agreement, detailing the ownership proportion in a stamp paper, as legal proof for ownership.

 

To get the best out of the tax savings, it is good to let the partner with the higher pay make a higher contribution towards the home loan resulting in a better tax benefit collectively. In the case of an earning couple, this would make most sense as other expenses can be manged with the income of the person making a lesser share towards the loan. This would help you optimize the benefits from the tax exemption on principal and interest repaid.

 

 

 

Karishma Chhajer
CA, Jodhpur
2439 Answers
27 Consultations

5.0 on 5.0

Yes Sir.

 

Under Section 80EE: purpose of loan : purchase of residential house. deduction in addition to section 24 & 80C maximum deduction - 50,000 subject to conditions.

 

Karishma Chhajer
CA, Jodhpur
2439 Answers
27 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

1. No, it is not at all necessary.

 

However, a co-borrower can claim tax deduction based on property rights or his/her share in the property.

 

For instance, A and B bought a property taking a joint home loan, and the property rights are in the ratio of 60:40, respectively. The amount of total home loan principal and interest paid during the year should be claimed in the same ratio—60:40.

 

It is advisable to maintain a joint bank account to pay back the home loan, in which each co-borrower contributes respective share of the EMI. This will also help in maintaining records of payment and help in tax filing.

 

 

2. There are two components of a home loan—principal and interest. Principal repayment qualifies for tax deduction under section 80C of the Income-tax Act, 1961, which has an overall limit of Rs1.5 lakh.

 

Each co-borrower can claim this benefit to the tune of Rs1.5 lakh, but the combined claim cannot increase the total principal repaid during the year.

 

Interest payment qualifies for deduction under section 24(B), which has an overall limit of Rs2 lakh. Again, all co-borrowers can claim tax deduction for the same from their respective incomes, but the total claim cannot exceed the actual interest paid.

 

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
5131 Answers
185 Consultations

5.0 on 5.0

Besides these two tax deductions available to all homeowners, irrespective of whether they are first-time buyers or own more than one property, there is additional deduction available to first-time homebuyer. This benefit is of up to Rs50,000 under section 80EE of the Act.

 

This deduction is over and above the Rs 2 lakh limit under section 24 of the income tax act.

 

To claim this deduction your loan must have been taken from a financial institution for purchasing your first residential house property.

Payal Chhajed
CA, Mumbai
5131 Answers
185 Consultations

5.0 on 5.0

Hi

 

1.Yes investment should equal in these case.

2.Interest deduction maximum to 2 lacs and principal repayment max to 1.5 lacs.

 

Additional deduction of 50000 (under sec 80EE)will not be available in these case as it doesnot satisfy the eligibility criteria. 

Individual can claim benefit under this section only Value of the residential house property should not more than 50 lakh and Loan value should not be more than 35 lakh.Further For this purpose, loan should be sanctioned between 01.04.16 to 31.03.17.

 

Hope it helps

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

That depends on bank they would value the apartment based on their parameters and check the average income of the person applying for loan and if they feel that the person can return the loan they will surely provide the loan of 50 lakhs.

I don't think there is any exemption of Rs 50000 in income tax for purchasing new house could you please be more specific regarding the section which provides such exemption.

Naman Maloo
CA, Jaipur
3875 Answers
51 Consultations

5.0 on 5.0

Hi,

- Your son-in-law can get loan of Rs.50 l against LAP and personal guarantee of self and spouse.

- It is better to claim registration charges, stamp duty charges as cost of acquisition and claim index benefit at the time of sale. 

 

Thanks

Vivek Kumar Arora
CA, Delhi
4222 Answers
399 Consultations

5.0 on 5.0

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