Interest paid on Housing Loan - Benefit of 1.5 lacs to both Husband and wife

[singai]

Hi
Myself and my wife own a joint property as well as loan in joint name. our interest on loan for the year 2008-09 stands at Rs.2.70 lacs. As i read in most articles and forums, I understood that both can claim interest on HL to a maximum of Rs.1,5 lacs (for self occupied property). Both we have claimed the IT benefit. Now we have assessment proceedings, wherein AO says totally both of us together can claim only Rs.1.5 lacs and it not for each one... Looking for basis of both claiming 1.5 lacs as int. and any case laws or materials which can be provided to the AO.
Thanks
Sivakumar.K

[Aman Aggarwal]

Dear Sir,

In Case of Co-Ownership of property (section 26 of the income tax act), income under the head HOUSE PROPERTY shall be calculated assuming there is a single owner.
Hence all relevant deductions under the act i.e. Standard 30% deduction as well as interest deduction ( maximum Rs.150000 in case of self occupied) will be taken and income calculated thereupon.

The resulting figure that arrives shall THEN be apportioned among the co-owners in their respective share(which is definite & ascertainable) of house property & included in his total income.
Hence the Issue of claiming Rs. 1.5 laks as deduction SEPARATELY to both husband & wife is immaterial.
THE AO is right that both of you can together claim 150000 deduction & not separately in your individual returns.


This has been explicitly provided in the Act by virtue of section 26

[Aman Aggarwal]

Dear Sir,

On basis of ur reply, i read the section again coupled with case laws on the net.
You are right.

Bombay High court in the case of P.R.Thakkar :-
held that  a reading of sections 20 to 26 of the said Act made it clear that, where a house property was owned by co-owners who had definite and ascertainable shares, the gross income from such property was first to be ascertained on the basis of the provisions of section 23 of the said Act. From such gross income, the deductions under section 24 had to be made. This gave the net income from the total property as available to the co-owners. The net income was then to be allocated to each of the co-owners in the proportion of their respective shares. After this was done, each of the co-owners was entitled to the deductions under section 24. Each was entitled to the deduction of interest on the amount of money that he might have borrowed for the construction or acquisition of his share in the house property.
So, Co-owners are entitled to a deduction of up to a maximum of Rs. 1.5 lakh each on account of interest paid on the home loan. However, if the house is given on rent, then there is no limit on the amount of deduction on account of interest paid on the borrowed capital.

[Advocate Anumita]

can u please give the citation of the judgment? (P.R. Thakkar case, Bombay HC)

Thanks !

[Aman Aggarwal]

Commissioner Of Income-Tax vs P.R. Thakkar on 26 March, 1987
Equivalent citations: 1988 170 ITR 224 Bom


Here is the full Case Law
http://indiankanoon.org/doc/461568/

[singai]

Thanks Aman.

The reference was use full.

Sivakumar.K

[subodh]

Hi Aman,
I should appreciate, your replies were quite elaborate and perfect. So was the clarity of qn by singai.
(Im bored up of vague, non-explanotory qns. and ans)

[Aman Aggarwal]

Thanks :)

[satishcgarg]

What about the employee who give the interest on borrowed fund for construction of housed held in the joint name with his wife in the following two circumtances:-
1. if all the EMI are paid by husband.
2. if huband and wife both pay the EMI.

Should the employer take the interest on housing loan 1.5 lakhs or to be restricted his share only.

[satyanveshi]

If wife had separate sources of income and her own funds have been utilised for construction of the house property alongwith the funds of the husband besides the bank loan obtained on both names then she is also eligible for interest.
Incase she donot have any separate sources of income and only for the name sake the house is constructed in joint names, then irrespctive interest payment, the husband will only eligible for deduction u/s 24

[amitverma.info]

Hi Aman

I am a co-owner of the property jointly with my mother and brother with 1/3rd share each. I  have also taken a loan in which i am the primary applicant for the loan and the emi is being paid from my account only.We have rented the property to someone.  Is it possible that i can show the complete loss in "Income from house property" in my ITR only as i am paying the emi and i am incurring the loss in it.  Co-owners can sign a declaration that they are claiming any tax benefits on this. Please suggest.

Amit

Dear Sir,

In Case of Co-Ownership of property (section 26 of the income tax act), income under the head HOUSE PROPERTY shall be calculated assuming there is a single owner.
Hence all relevant deductions under the act i.e. Standard 30% deduction as well as interest deduction ( maximum Rs.150000 in case of self occupied) will be taken and income calculated thereupon.

The resulting figure that arrives shall THEN be apportioned among the co-owners in their respective share(which is definite & ascertainable) of house property & included in his total income.
Hence the Issue of claiming Rs. 1.5 laks as deduction SEPARATELY to both husband & wife is immaterial.
THE AO is right that both of you can together claim 150000 deduction & not separately in your individual returns.


This has been explicitly provided in the Act by virtue of section 26

[balas]

Hi Mr. Amit,

As the house is let out, interest payment on loan on HP is fully deductible i.e. no limit.  Per your statement,  you can prove that EMI payment is being made by you in full and hence entire interest payment can be attributed to your share (irrespective of each loan applicant eligible to claim to claim interest payment on loan repayment, which is not the case here).

In respect of a let out house property, there are no restrictions on deductions and therefore, there can be loss of any amount under this head.
The loss from one house property can be set off against the income from another
house property. The remaining loss, if any, can be set off against incomes under
any other head like salary. In case the loss does not get wiped out completely, the
balance can be carried forward to the next assessment year to be set off against
the income from house property of that year. However, such carry forward is
restricted to eight assessment years only.

Hope this helps.

Rgds
Bala

[amitverma.info]

Thanks Bala..

[Matthewfrank]

The United States government provides many benefits to the members that are now serving or have serve in the past in the US military. Active and former members of the United States military can take advantages of benefits ranging from education incentives to compensation for disability occurred while in the military to even life insurance programs. One of the most used and most important is the Veteran Home Loan Program that provides assistance in financing a home loan.
Dan Jones