Housing loan & tax benefits on father's property
I am planning to demolish and reconstruct my house. The land is in my father's name. Will I be eligible to take a loan on that land being my father is a co-borrower. If yes, then will I be eligible for Tax Benefits for the loss of EMI.
Asked in Property Law from Coim, Tamil Nadu
1) since land and house is in your father name your father would be eligible to take loan against property .
2) you can be a co applicant of loan since your father may not be granted loan if he is a senior citizen
3) your father can also execute sale / gift deed in your favour for 50% share in the house
4) if you are then reconstructing the house and paying EMI then you would be eligible to claim tax benefits for loan repaid by you
in case any loan taken jointly with father or singly, you will not be entitled to get any tax benefits of principal repayment u/s 80C and interest deduction u/s 24b even if you serve the loan repayment from your income. It doesn’t matter whether you makes all (or part of) the repayments. It is even immaterial whether you are a first applicant or sole applicant or not an applicant at all. To claim tax benefits, you needs to be the owner (or co-owner) of the property
1. Is your father alive?
2. You have stated that your father is a co-borrower. Who is the other co-borrower?
Yes my father is alive. I am getting the loan and my father will be co-borrower for the housing loan. I will be paying 100% EMI, since my father is retired and above 60.
Also just one more query. Suppose the loan period is for 25 years, in this tenure will my father be able to transfer to my sister.
Asked 2 years ago
1) your father can make a will bequeathing the house to your sister if he so desires
2) your father cannot sell , gift , transfer or create third party rights on the house without bank consent
1. Interest on home loan can be claimed as a deduction subject to a maximum of 200,000 INR (Rs.150000/- up to A.Y. 2014-15), or the actual interest repaid whichever is lower.
2. Principal can also be claimed up to the maximum of 150,000 INR. So you should be able to claim these deductions.
3. Unless and until the loan is repaid in entirety neither you nor your father will be able to transfer the property.
It is advisable to get the property transferred in your name properly either by executing a registered gift deed or settlement deed in your favor. By this you can relieve your father from becoming a co-borrower and also you can be free about the future that your sister cannot claim any right in it being your own property.