Query on home loan tax excemption

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  1. veera0107

    veera0107 New Member


    I bought a under construction flat on my Wife’s name and myself as the co-owner. We took home loan on my wife’s name as she is a bank employee. Now I have following queries.

    1. Can I avail the tax benefit for the home loan(since I’m co-owner of the property) by providing any letter/undertaking that my wife is not claiming tax exception for the same.
    2. Is it possible to claim tax exception for an under construction flat. Note: We have started re-paying our full emi for the loan and it currently deducted from my wife’s account.

  2. Karan Batra

    Karan Batra Well-Known Member

    You cannot claim any exemption for under construction flat. The exemption would be allowed only after completion of construction
  3. veera0107

    veera0107 New Member

    Thanks, Karan. But can I avail the tax benefit for the home loan(though i'm not the co-borrower, but I’m co-owner of the property) by providing any letter/undertaking that my wife is not claiming tax exception for the same
  4. ZED

    ZED Well-Known Member

    No, you can not . In order to claim interest deduction, the assessee claiming the deduction should also be the one repaying the installments.

    If it is possible that NOW the loan can be obtained jointly (talk to the bank) then deduction can be provided to you.
    If you have not contributed towards the property acquisition then kindly note that your wife might require to declare this under Benami Transactions (Prohibition) Act , to her AO that she is the real and sole owner of the property and for all purposes of the Income Tax Act, and the rules made thereunder, she be deemed as the owner of the house property.

    If you do not do like this then capital gain at the time of transfer will accrue to both of you and there can be some problem during scrutiny. Further if you do not show capital gain in both the returns (Yours and of your wife) , notice will be sent to you from the system automatically on the basis of A.I.R filed by thr sub-registrar/registrar. You will have to explain why you did not disclosed the capital gain in your income.
    [The system is not integrated and hence even if you file declaration, this notice will be served but you can submit it response, without any issue.]
    What I suggested was to prevent trouble at the time of scrutiny which if by any chance happens.
  5. ZED

    ZED Well-Known Member

    Also read
    CIT V Hasina Begum (1986) 158 ITR 215 (Cal)
    Wherein it was held that it is open to AO to find out who has provided the fund and who is the REAL OWNER of the property.
    There are several other judgements also and plenty of them have nexus with exemption u/s 54.
  6. Hi

    I have a query. My father owned a property ( house + land ), that has become quite old now. We decided to demolish and construct a new house there. My Father then made a settlement agreement ( wherein 800 sq ft were given to us ( 2 sons ) each equally and he retained 400 sq ft = Total land area was 2000 Sq ft and change ). The settlement deed is a single one, registered and has mention of the portions settled to each of us ( we 2 brothers ) and his share clearly. The plan is to have a Stilt floor ( parking ), First Floor and Second Floor.

    Now when we approached a bank for loan, their legal team is saying that since it is a single deed, it will be a single loan account and all of us has to be applicant, co-applicant and guarantor for the same. My query to the bank was if it is going to be a single loan account

    1. How will they ensure equal EMI flow from our accounts ( me and my brothers )
    2. How will the tax claim be made ( if it is a single loan account can me and my brother claim equal EMI as tax deduction in our respective organizations ). This is quite confusing for us. So request you to help me clarify on the same.

    Thanks & Regards

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