The Hindu Business Line : Can I get tax benefit for paying up wife's home loan?

My wife purchased a house in Chennai in 2005 after taking a home loan from HDFC based on her salary. The house is registered solely in her name; the home loan is also taken in her name. She quit her job in May 2006 to take care of our baby.

Currently I am paying the EMIs from my salary. Can I avail myself of tax benefits? I explored the other options, such as, she selling the house back to me and I taking a home loan.

But I found that the registration and other costs will be high, negating the tax benefits. What would we have to do get the tax benefits?

Natarajan, email

I am afraid you would not get the deduction under Section 80C, for the benefit is premised on the condition that the house property should be owned by the person paying the EMIs. In hindsight, you would have done well to go for joint registration as not only could each one of you have claimed Rs 1 lakh each as deduction under Section 80C but also in a situation like the one you find yourself in, you the taxpayer could have continued to claim at least your quota of the benefit thereunder.

Rent, loan factors in I-T

I am a Central Government employee. My income for the assessment year 2006-07 is Rs 2,30,551. I had taken a housing loan from SBM of Rs 700,000 at 8.5 per cent interest for 12 years. I am repaying the EMI at Rs 8,149 since April 2006. I have not received the split amount of principal and interest from the bank. From July 2006 the house has been self-occupied. Between April 2006 and June 2006 I stayed in a rented house, paying Rs 16,500 for three months as rent. How do I account the EMI and rent paid for three months for calculating income-tax?

J. Prakash, Bangalore

Since the repayment has started during the current year, you have time to ascertain from the bank the break up of the EMIs into principal and interest.

The principal part of the EMIs would qualify for deduction from your gross total income under Section 80C together with your contribution to provident fund, etc., subject to a ceiling of Rs 1 lakh.

The salary for the three months when you lived in a rented house must first be found out. Forty per cent of this salary or the actual house rent allowance (HRA) received or rent paid in excess of 10 per cent of such salary, whichever is the least, would be the amount of HRA exempt from tax.

The interest component of the EMIs can be claimed as interest under the head `income from house property'. The annual value of one self-occupied residential house is taken at nil. Assuming this is your only such house, this would result in a loss from this house to the extent of interest the deduction for which cannot exceed Rs 1.5 lakh. Such loss can be set off against your salary income both for purposes of TDS by the employer as well as by you in your income-tax return.

(ASK! Send in your queries to ask@thehindu.co.in.)

http://MentorQA.blogspot.com

S. Murlidharan

More Stories on : Income Tax | For the Asking

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
One more New Year party amidst persistent poverty

How smooth was the transition, economically?

Some properties of assignment model

Records to be maintained

Crossing the Final tax hurdle

Options for old age security

An engineering student's dilemma

Spot hidden talent, Kalam tells IITs

Number Crunch

Just Do IT

Can I get tax benefit for paying up wife's home loan?

Aim high

Get empowered through ADR