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Save Tax on Your Home Loan

 

For self-occupied house property, the annual value of the house property is considered to be NIL.

Further, an individual could claim a deduction for the interest paid on the home loan (for purchase or construction) upto Rs. 2 Lakh, subject to certain conditions. This would result in a loss under the head house property of upto Rs. 2 Lakh, which could be set off against other income. If the property is let out, the actual amount of housing loan interest, without limit, could be claimed as deduction. Also, an individual can claim a ded. upto Rs. 1,50,000 for repayment of the principal amount uls 80C.

JOINT BENEFITS:

This advantage gets multiplied if the property is acquired in a joint name, as each individual is entitled to claim tax benefits. Thus, if a husband and wife have a property with equal share, both are entilied to claim these deductions. There is no restriction as to who the co-owner siiould be and there is no limit on the number of joint owners. Property can be jointly owned with your spouse, brother or parents.

IF the total yearly interest liability is , say Rs. 5,40,000 and the property equally owned by three people then each gets a deduction of Rs. 1,80,000.

Here, the fillowing points merit consideration :

First - the house should get bought in the joint name and proof of co-ownership should be maintained.

Second - the Housing Loan should also be taken in Joint Names.

The repayment of loan should preferably be made individually by the co-owners directly, if feasible, or from a joint tank account in which funds for repayment of loan should be contñbuted by the co-oners in proportion to their ownership/loan. All the co-owners should have their independent income sources from which the loans are re-paid. Typically, the tax benefits are available in proportion to the joint ownership and the loan taken by the co-owners.

SET OFF YOUR INTEREST PAYMENT :

The main advantage of this deduction ( which in technical parlance is a Loss under the head ' Income from House Property' ) is that you can set it off against your income, which includes salary income, in the same year. This reduces your total tax liability. Any loss not set off within the same year can be claimed forward and set off in the next 8 years. However, is the susequent years , such set off is possible only against ' Income from House Property'.

 
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