Go Back   ManagementParadise.com | Management & Business Education Learning Platform Upload / Download Banking and Insurance Projects and Notes > Taxation and financial services

Rules of tax rebate on home loans

Discuss Rules of tax rebate on home loans within the Taxation and financial services forums, part of the Upload / Download Banking and Insurance Projects and Notes category; Rules of tax rebate on home loans Tax benefits are available on home loans. They can be claimed on bsoth ...

Reply

 

Thread Tools Display Modes
Rules of tax rebate on home loans
Old
 (1 (permalink))
priyanka1987
priyanka1987 is a name known to allpriyanka1987 is a name known to allpriyanka1987 is a name known to allpriyanka1987 is a name known to allpriyanka1987 is a name known to allpriyanka1987 is a name known to all
 
priyanka1987
Management Paradise Newbie
Status: Offline
Posts: 287
Join Date: Mar 2007
Cool Rules of tax rebate on home loans - June 5th, 2007

Rules of tax rebate on home loans



Tax benefits are available on home loans. They can be claimed on bsoth the principal and interest components of a home loan as per the Income Tax Act. These deductions are available to assessees who have taken a loan to either buy or build a house, under Section 24(b).


Interest on borrowed capital is deductible as:


If these conditions are satisfied, interest on borrowed capital is deductible up to Rs 1.5 lakhs:

l. Capital is borrowed on or after April 1, 1999 for acquiring or constructing a property

2. The acquisition/construction should be completed within three years from the end of the financial year in which capital was borrowed

3. The lender certifies interest payable on amount advanced for acquisition or construction of the house, or as refinance for the principle amount outstanding under an earlier loan taken for such acquisition or construction

If the conditions stated above are not satisfied, the interest on borrowed capital is deductible up to Rs 30,000. However, for that, these conditions have to be fulfilled:

4. Capital should be borrowed before April 1, 1999 for purchase, construction, reconstruction, or repairs of a house

5. The capital is borrowed on or after April 1, 1999, and construction is not completed within three years from the end of the year in which capital is borrowed.

In addition to the above, principal repayment of the loan/capital borrowed is eligible for a deduction of up to Rs 1 lakh under Section 80C from assessment year 2006-07.

The maximum deduction permissible in a financial year for the original loan (if any) plus for any additional loans taken is Rs 1.5 lakhs. Hence, if a borrower's deductions on an existing loan are less than Rs 1.5 lakhs, he can claim further benefits from the additional loan taken, subject to an upper limit of Rs 1.5 lakhs for a financial year.

It is to be noted that the tax benefits under Section 24 and deduction under Section 80C of the Income Tax Act can be claimed only when the payment is made. If a person fails to make EMI payments, he cannot claim tax benefits for them.


Who is eligible for rebate?


According to the Income Tax Act, only the person who has taken the loan can claim tax rebates. A husband and wife, both of whom are taxpayers with independent income sources, can get tax deduction benefits, with respect to the same housing loan. In this case, the tax benefits can be shared to the extent of the amount of loan taken in their respective names. If it is proved that the home loan is simply an arrangement between the loan-seeker and the builder or with a third party for the purpose of claiming tax benefits, they will not be allowed and benefits previously claimed will be clubbed to the income and taxed accordingly.



Capital gains tax



If a person buys a house and sells it within the same year/after three years, and if any profit is made, then a capital gains tax liability arises. For example, if X purchases a house for Rs 25 lakhs by taking a loan and he sells it in the same year for Rs 35 lakhs, he makes a profit of Rs 10 lakhs. On this profit, he will be liable to pay short-term capital gains tax since the sale took place in the same year.

But, if the sale had taken place after three years, a long-term capital gains tax liability would have arisen. The long-term capital gains will be exempt from tax if the profit amount (after factoring in the indexation benefits) is invested in capital gains tax saving bonds or in a house as specified under Section 54.



Regards,

Priyanka
Advertisements



Warm Regards,
Priyanka
(FOUNDER OF BBI FORUM)



Life is not the amount of breaths u take but the moments that take ur breath away..
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
Press Thanx Button If You Find POst Usefull...May God Bless Ya All
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
Friends: (0)
Reply With Quote
Re: Rules of tax rebate on home loans
Old
 (2 (permalink))
henryedit
henryedit is an unknown quantity at this point
 
henryedit
 
Institute: BHA
Status: Offline
Posts: 2
Join Date: Mar 2009
Re: Rules of tax rebate on home loans - March 30th, 2009

hi,
This is henryedit.
====================================
henryedit
Friends: (0)
Reply With Quote
Re: Rules of tax rebate on home loans
Old
 (3 (permalink))
henryedit
henryedit is an unknown quantity at this point
 
henryedit
 
Institute: BHA
Status: Offline
Posts: 2
Join Date: Mar 2009
Re: Rules of tax rebate on home loans - March 30th, 2009

hi,
This is henryedit.Iam newly Join this site.Mostly I dont known this site.But this site is very useful to all of our people.There are several lucrative business opportunities homeloans online. Business minded people generally decide to start a business from home and prefer to start a home based business nowadays. Some at-home businesses are externally stimulated. A business start a good life please visit the link.
=================
henryedit
Interest Rates for Mortgages
Friends: (0)
Reply With Quote
Re: Rules of tax rebate on home loans
Old
 (4 (permalink))
Jitendra Mazee
jitendra05 is on a distinguished road
 
jitendra05
Student of Bachelor of Engineering at RGTU Bhopal
Bhopal, Madhya Pradesh
Management Paradise Guru
 
Institute: RGTU Bhopal
Status: Offline
Posts: 27,848
Join Date: Jan 2016
Location: Bhopal, Madhya Pradesh
Re: Rules of tax rebate on home loans - February 25th, 2016

Quote:
Originally Posted by priyanka1987 View Post
Rules of tax rebate on home loans



Tax benefits are available on home loans. They can be claimed on bsoth the principal and interest components of a home loan as per the Income Tax Act. These deductions are available to assessees who have taken a loan to either buy or build a house, under Section 24(b).


Interest on borrowed capital is deductible as:


If these conditions are satisfied, interest on borrowed capital is deductible up to Rs 1.5 lakhs:

l. Capital is borrowed on or after April 1, 1999 for acquiring or constructing a property

2. The acquisition/construction should be completed within three years from the end of the financial year in which capital was borrowed

3. The lender certifies interest payable on amount advanced for acquisition or construction of the house, or as refinance for the principle amount outstanding under an earlier loan taken for such acquisition or construction

If the conditions stated above are not satisfied, the interest on borrowed capital is deductible up to Rs 30,000. However, for that, these conditions have to be fulfilled:

4. Capital should be borrowed before April 1, 1999 for purchase, construction, reconstruction, or repairs of a house

5. The capital is borrowed on or after April 1, 1999, and construction is not completed within three years from the end of the year in which capital is borrowed.

In addition to the above, principal repayment of the loan/capital borrowed is eligible for a deduction of up to Rs 1 lakh under Section 80C from assessment year 2006-07.

The maximum deduction permissible in a financial year for the original loan (if any) plus for any additional loans taken is Rs 1.5 lakhs. Hence, if a borrower's deductions on an existing loan are less than Rs 1.5 lakhs, he can claim further benefits from the additional loan taken, subject to an upper limit of Rs 1.5 lakhs for a financial year.

It is to be noted that the tax benefits under Section 24 and deduction under Section 80C of the Income Tax Act can be claimed only when the payment is made. If a person fails to make EMI payments, he cannot claim tax benefits for them.


Who is eligible for rebate?


According to the Income Tax Act, only the person who has taken the loan can claim tax rebates. A husband and wife, both of whom are taxpayers with independent income sources, can get tax deduction benefits, with respect to the same housing loan. In this case, the tax benefits can be shared to the extent of the amount of loan taken in their respective names. If it is proved that the home loan is simply an arrangement between the loan-seeker and the builder or with a third party for the purpose of claiming tax benefits, they will not be allowed and benefits previously claimed will be clubbed to the income and taxed accordingly.



Capital gains tax



If a person buys a house and sells it within the same year/after three years, and if any profit is made, then a capital gains tax liability arises. For example, if X purchases a house for Rs 25 lakhs by taking a loan and he sells it in the same year for Rs 35 lakhs, he makes a profit of Rs 10 lakhs. On this profit, he will be liable to pay short-term capital gains tax since the sale took place in the same year.

But, if the sale had taken place after three years, a long-term capital gains tax liability would have arisen. The long-term capital gains will be exempt from tax if the profit amount (after factoring in the indexation benefits) is invested in capital gains tax saving bonds or in a house as specified under Section 54.



Regards,

Priyanka
Hey priyanka, its nice there is a tax benefit on the home loan and thus we can invest in the property. Well, i am also uploading a document where you and other people would get more detailed information on tax rebate on home loan.
Attached Files
File Type: pdf tax rebate on home loans.pdf (92.1 KB, 0 views)
Friends: (0)
Reply With Quote
Reply

Bookmarks

Tags
home, loans, rebate, rules, tax
Related to Rules of tax rebate on home loans
 

Similar Threads

Thread Thread Starter Forum Replies Last Post
Educational Loans indrajit_v5 Financial Management 1 January 29th, 2016 01:39 PM
A SWOT analysis on reverse mortgage loans ross18 Miscellaneous Projects 3 May 2nd, 2013 09:22 AM
Home loans shahbhumitc Financial Management 8 September 4th, 2010 05:18 PM
Loans indrajit_v5 Financial Management 2 June 7th, 2008 09:04 AM
Home loans set to become cheaper indrajit_v5 Articles !! 0 September 23rd, 2006 01:14 PM
 


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are Off


ManagementParadise.com is not responsible for the views and opinion of the posters. The posters and only posters shall be liable for any copyright infringement.



Search Engine Optimization by vBSEO ©2011, Crawlability, Inc.