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Ask Mint Money | If not co-owner, no tax benefit for co-applicant on home loan

Ask Mint Money | If not co-owner, no tax benefit for co-applicant on home loan
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First Published: Thu, Jan 13 2011. 12 03 AM IST
Updated: Thu, Jan 13 2011. 12 03 AM IST
My husband bought a house jointly with his mother five years ago and has been paying the equated monthly instalments (EMIs) for the home loan taken for the same. We got married last year and now I am also getting my name added in the home loan as co-applicant. Can I also claim tax benefits up to Rs1.5 lakh (along with my husband), even though the property is not in my name?
—Shrishti
As per section 23 of the Income-tax Act, the income from house property is chargeable to tax in the hands of the person who is the owner of the property. Further, section 24(b) of the Act states that deduction in respect of interest payable on loan taken for the purpose of acquisition, construction, repair or reconstruction of the property is allowable while calculating income under the head “house property”. On a combined reading of both the sections, it is clear that only the owner of the property can claim deduction in respect of the interest paid/payable on borrowed funds. Since in your case you are not the owner of the property, but only a co-applicant of the loan, you would not be entitled to deduction of interest under section 24(b) of the Act.
I have taken a loan from Credila Education Finance for my son’s education. I am paying the EMI. Can I claim interest on the said loan under section 80E? My son is now working and files his returns, too, but does not claim deduction under section 80E.
—Suresh Desai
As per section 80E, deduction is allowed in respect of any amount paid by an individual by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing higher education or for the purpose of higher education of his spouse and children. The period for the same is eight assessment years starting with the year in which the individual starts making the payment of interest or until the interest is paid in full, whichever is earlier. Thus, you can claim deduction on account of interest paid on loan irrespective of the fact that your son is working and files his income-tax return.
I would like to know that if I invest Rs20,000 on infrastructure bond for five years, will I be paying tax on income that I get from such infrastructure bond?
—Vikas Kakkar
Income from infrastructure bonds would be in the form of interest, which is either paid annually or at the time of maturity. Such interest income would be chargeable to tax under the head “income from other sources”. Hence, if you invest Rs20,000 in infrastructure bonds and you get Rs35,000 at the time of maturity, then the balance Rs15,000 is interest income which would be chargeable to tax. You can offer the income for taxation on accrual basis, i.e. as and when it becomes due to you, or on cash basis, i.e. at the time when you actually receive it.
—Queries and views at mintmoney@livemint.com
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First Published: Thu, Jan 13 2011. 12 03 AM IST
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