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Ask Mint | No tax break if you don’t own property

Ask Mint | No tax break if you don’t own property
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First Published: Wed, May 12 2010. 09 21 PM IST

Updated: Wed, May 12 2010. 09 21 PM IST
I stay with my sibling. He is a government employee and stays in a government accommodation. I pay him Rs7,000 every month for expenses. Can I claim tax benefit on my house rent allowance on this amount?
—Mohan Bhagat
You cannot do so because your brother is not the owner of the house. He may end up flouting government rules if he accepts any amount from you as rent. Refrain from doing any such thing to save tax as it could backfire in the future.
My father has a plot and I want to construct a house on it. If I want to take a home loan, what I have to do? How can I get tax deduction—by taking a gift deed from my father or making a sale deed between us?
—K.J. Raina
Since you are not the owner of the land, you will have to become an owner in order to be able to avail tax benefits for interest payments as well as for the principal repayment of the loan. To become an owner or a co-owner, you will need to acquire ownership rights either as a donee (receiver of a gift) or as a purchaser. It may be a better idea to get it as a gift as that may save stamp duty payable on the transfer document.
Can I get tax benefit on two-wheeler loans?
—Vani
There are no tax benefits on repayment of two-wheeler loans, unless the vehicle is being used for your business.
My wife and I plan to buy a flat worth Rs60 lakh. We also plan to take a home loan of Rs50 lakh. Will both of us be eligible for a deduction of Rs2.5 lakh each?
—Shankar Malhotra
If you and your wife are owners or co-owners of the property you can get exemption for home loan repayments in the ratio of your respective shares in the loan. Tax deduction benefits will be available for each of you separately under section 24 (interest payable on the loan) up to Rs1.5 lakh each if the property is self-occupied and under section 80C up to Rs1 lakh each (for the principal repaid) as per the ratio of the loan.
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First Published: Wed, May 12 2010. 09 21 PM IST
More Topics: Tax | Property | Flat | Income | Money Matters |