• Last minute investments advice for this financial year.

Hi, 

My gross total income stands at approximately 15 lacs (including TDS) and my wife's total income stands at approximately 30 lacs (including TDS). We have two home loans. 
1. 30 lacs home loan on an under construction property for which interest is being paid. My wife is primary for this and I am a coapplicant. The loan started sometime in June 2018.
2. 40 lacs home loan on a resale flat we bought in Nov 2018. I am primary applicant and my wife is a coapplicant for this loan. Loan started in Nov 2018. 

We never took home loans before this but my wife has an apartment in her name which was bought in 2010 without a loan. 

here are my questions -
a) Can we both claim for deduction on interest/principal paid towards separate home loans?
b) My 80c only has PF deduction ~40,000INR and 80D medical insurance at 14,000INR. So, can I pay say, 95,000INR towards my home loan principal before end of march and take 80C deduction to 1.5lacs? 
c) I read somewhere that homeloan amount above 30 lacs i.e 40 lacs is not qualified for tax benefits, is this true? 
d) what other last minute investments would you recommend for this financial year? 

-Surya
Asked 3 months ago in Income Tax from Hyderabad, Telangana

What type of income are you earning?

Firstly I don't think there is any such limit on the amount of home loan.

Are you both owner in both the properties? Because loan applicant can be different and ownership can be different.

If you both are co owner then you both can claim deduction of principal amount under section 80C and with regards to interest expense under section 24 you can only claim that for the house which is complete.

So please tell that first.

You have some options under section 80C (with else investment or PPF), 80CCD(1b) in NPS and you can call me for that as it would be a long discussion and also I can provide you service of filing your ITR.

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
1486 Answers
16 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

1. Yes, you both for deduction on interest/principal paid towards separate home loans subject to certain conditions.

To be able to claim the tax benefits on the property –

  • You must be a co-owner in the property– To be able to claim tax benefits for a home loan, you must be an owner in the property. Many a times, a loan is taken jointly, but the borrower is not an owner as per the property documents. In such a case you may not be able to claim tax benefits.
  • You must be a co-borrower for the loan –Besides being an owner, you must also be an applicant as per the loan documents. Owners who are not borrowers and do not contribute to the EMI shall be devoid of the tax benefits.
  • The construction of the property must be complete – Tax benefits on a house property can only be claimed starting the financial year in which construction of the property is complete. Tax benefits are not available for an under construction property. However, any expenses prior to completion are claimed in five equal instalments starting the year in which construction is complete.

2. Yes, you can take deduction of principal repayments u/s 80C.

  • Each co-owner, can claim a deduction of maximum Rs 1,50,000 towards repayment of principal under section 80C. This is within the overall limit of Rs 1,50,000 of Section 80C.

 

3.Not true.

 

4.Broadly/Practically, there are following Income tax sections under which we can claim the tax exemptions - 

 

80C-Section 80C comprises of various investments and expenses that are eligible for tax deductions. A taxpayer can claim maximum tax deductions of Rs 1.5 lakh for a particular financial year (FY) from his/her taxable income through investments made by him/her under section 80C of the Income Tax Act, 1961.

1. NPS

2. PPF

3. LIC

4. ELSS

5. Term deposits

etc.

 

It is advisable to claim maximum tax deductions of Rs 1.5 lakh by investment specified u/s 80C. 

 

80CCD-To encourage the investors to invest for retirement in Nation Pension Scheme, the government allowed addition tax deduction of Rs 50,000 under section 80CCDD.

 

It is over and above Rs. 1.5 lakh limit.

 

80D-Deduction for the premium paid for Medical Insurance up to Rs. 50000 subject to conditions.

 

80G-The various donations specified in u/s 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in section 80G.

 

Thanks & Regards,

Payal Chhajed

 

 

 

 

Payal Chhajed
CA, Mumbai
2217 Answers
24 Consultations

5.0 on 5.0

If you work as a professional and not a salaried employee we can show some expenses against your income to save some tax.

You can claim the principal amount of property under construction and section 80C says that one can claim deduction of any amount paid for loan taken for construction of house property, but you can't claim any interest expense for property under construction.

Yes you can consume 1.5 lakh total by using PF and principal amount but NPS will provide you additional 50k deduction over and above 1.5 lakh if you want to save tax.

Hope I have solved all your queries if still you have any queries you can call me or I can even help you in filing your ITR.

You can always rate the answer and provide your valuable feedback if you are satisfied.

Naman Maloo
CA, Jaipur
1486 Answers
16 Consultations

5.0 on 5.0

Hi

 

Both should be owner in the property,to claim the home loan deduction .It is subject to the maximum limit of Rs 1.5 lacs for 80C and 2 lacs for Interest on home loan deduction for self occupied property.

Interest on home loan deduction can be claimed only after Construction is completed. Pre-construction Interest can be claimed after completion in five equal installments,subject to the max limit.

Yes you can pay before 31.march and can claim 80C deduction for principle amount.But check it with bank also as some banks have criteria for excess payment other than EMI.

Principle paid for under construction property is not allowed as deduction under 80c.

Hope it helps

 

Swati Agrawal
CA, Mumbai
1044 Answers
4 Consultations

5.0 on 5.0

Yes, you can just pay the principal amount of 95k to make the total of 80c reach 1.5 lacs.

 

However, you can get addition tax deduction of Rs 50,000 under section 80CCDD by investing in NPS.

 

Payal Chhajed
CA, Mumbai
2217 Answers
24 Consultations

5.0 on 5.0

Hi Surya

1. Yes, provided you both are actually paying the installments. As in.. if you are a co-owner of the property and a co-applicant in loan and your wife is paying entire installment, in that case you can't claim the deduction.

2. Yes.

Please note there shall be no deduction for principal repayment of an under construction property.

3. Nothing as such.

4. Investment related deductions could be under 80C, 80D, 80G etc. If your 80C limit is not fully utilized, you have many options under 80C.

 

Lakshita Bhandari
CA, Mumbai
3056 Answers
139 Consultations

5.0 on 5.0

Yes, no deduction can be claimed this year in respect of under construction property. Interest deduction is provided in 5 equal installments starring from the year of completion.

Yes, you can repay principal amount to make 80C deduction up to 1.5 lacs.

Lakshita Bhandari
CA, Mumbai
3056 Answers
139 Consultations

5.0 on 5.0

Hi,

 

1. Yes, By applying jointly for a home loan, tax deduction available on home loans can be enjoyed by the co-applicants separately, provided they are co-owners of the property and each of them is contributing to the home loan repayment. a) Principal repayments are eligible for deduction under Section 80C of the Income Tax Act up to a maximum limit of Rs.1.50 lakh. b) Home loan interest payments enjoy tax deduction under Section 24 up to Rs 2 lakh if the property is self-occupied; if the property is let out, the entire interest becomes eligible for tax deduction, i.e., there is no maximum limit.

 

2. Yes,However, it is important to keep in mind that this tax benefit is not available if the home loan payments are during pre-construction phase. 

 

3.Nothing as such.

 

4.Choose tax-saving investments based on your goals and risk profile. ELSS funds, PPF, NPS , Donation and fixed deposits are some of the popular options.

Karishma Chhajer
CA, Jodhpur
1074 Answers
4 Consultations

5.0 on 5.0

-Yes, deduction on home loan interest cannot be claimed when the house is under construction.

This pre-construction interest can be claimed in five equal installments from the year in which the construction of the property is completed.

,However, it is important to keep in mind that this tax benefit is not available if the home loan principal payments are during pre-construction phase.

 

-Yes, you can claim the principal amount of 95k as a deduction u/s 80C.

 

Karishma Chhajer
CA, Jodhpur
1074 Answers
4 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA