Home Loan Principal Repayment – Section 80C

by Gopal Gidwani on August 22, 2009 · 5 comments

in Taxation,Uncategorized

• An individual can claim income tax benefits on the principal repayment as well as the interest repayment on a home loan.
• The principal repayment of upto INR 1,00,000 qualifies for deduction from taxable income under Section 80C. The interest repayment of upto INR 1,50,000 qualifies for deduction from taxable income under Section 24(b) for a self occupied property.
• The deduction on the principal component of the home loan can be availed as soon as the borrower starts repaying the home loan.
• The borrower need not wait till the acquisition or completion of the house property.
• The interest repayment deduction under Section 24 can be availed after the completion or acquisition of the house property.
• The interest deduction for pre-acquisition or pre-construction period can be availed after the acquisition or construction is complete. This benefit can be availed in 5 equal instalments (20% each year) in 5 years.
• The house property for which the tax benefit is availed should not be sold before a period of 5 years, else the tax benefit is reversed.
• Money spend on reconstruction, renewal or repair does not qualify for this deduction.
• This deduction is only for residential property and not for commercial property.

 

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{ 5 comments… read them below or add one }

nitin tupkari December 9, 2010 at 3:04 am

I have buyed a flat in aug 2010 and started paying EMI (Not Pre-EMI) from Oct 2010, the possesion (occupancy) of flat is in Dec 2012.

Can I claim the benefits of Home Loan Principal Repayment under 80 C?

Reply

Gopal Gidwani December 12, 2010 at 9:31 am

Hello Mr. Nitin,

Since you have still not got possession of the property at the moment you can claim income tax benefits only on the interest part of the EMI and not on the principal part of the EMI. Once you get the possession of the flat in 2012 then you can claim the income tax benefit on the entire future EMIs (Principal under Section 80C and interest under Section 24 subject to the limits under these Sections). For the Principal amount between 2010 and 2012 before the possession, the tax benefit on this amount can be claimed in 5 equal yearly installments (20% every year) after getting the possession of the flat.

Reply

karthick December 31, 2010 at 9:53 am

My father g0t a home loan from a co -operative bank and he only the property owner. But me and my brother also signed in the loan document for the repayment procedures. Now i am repaying the loan principal for the past 1 year. Is it comes under the section 80c. I am waiting for your reply.

Thanks,
Karthick

Reply

Madhur January 5, 2011 at 11:32 am

Hi,

I have been paying home loan EMI’s for 2 years now, but I haven’t claimed any tax benefit so far as I learnt (mistakenly) that unless house property possession is taken, one can’t avail tax benefits neither on principal repayment nor on interest repayment. I was wrong.

Thanks to your bullet-ed points above which makes it very clear that the deduction on the principal component of the home loan can be availed as soon as the borrower starts repaying the home loan. And the borrower need not wait till the acquisition or completion of the house property.

May I know please what documents would be required to claim tax benefit for principal repayment ?

Reply

Gopal Gidwani February 7, 2011 at 3:17 pm

You just need the bank certificate mentioning the total amount paid as EMI with the break up of the total principal and the total interest

Reply

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