How to get tax benefits on your home loan

My wife and I dug into our savings and paid the registration and stamp duty.

Both of us are salaried individuals and work in the same organisation.
Can I claim exemption for the stamp duty and registration paid
this year?

If yes, can I claim exemption for the stamp duty and my wife, for
the registration?

- Ambarish Mitra

Sorry.

The deduction under Section 80C for stamp duty and registration charges is available only if the house property in question is possessed by the end of the same financial year.

What this means is that if you make the stamp duty and registration payment in the financial year April 2005 to March 2006 but get possession only in financial year April 2006 to March 2007, then you do not get the benefit.

So if you can postpone the registration and stamp duty payment to April 2006, you will be in a position to get the deduction and not otherwise.

Also, this deduction, unlike the interest payable during construction period, is lost forever if not utilised during the same financial year.

• Avail of HRA & home loan benefits

My wife and I purchased an apartment (co-owned) in May 2005. The actual date of completion will be in October 2006.

We took a joint home loan from a bank. A full disbursement was done to the builder and from May 2005 onwards, we began repaying our loan via Equated Monthly Installment.

Every month, the EMI cheque is given to the bank from my account, and my wife transfers 50% of the EMI to my account.

1. Can I claim tax benefits under Section 24 for interest paid till March 2006?

2. Will the amount paid till the apartment is completed be viewed as EMI or pre-EMI?

3. Can the principal repaid in May 2005 to March 2006 be claimed under Section 80C?

4. What will be the proportion of principal payment (for which tax exemption can be claimed) for my wife and myself?

- Ujjal Bose
 

It does not make a difference whether you pay EMI or pre-EMI to the bank. No tax benefits are available in respect of any financial year as long as the construction of the property is not complete before the end of that financial year.

Since the actual date of completion is October 2006, you will get tax benefits for the financial year April 2006 to March 2007.

Hence, any principal paid before March 31, 2006 will not be eligible for any tax benefits in that year or any subsequent year and is lost forever.

As far as interest payable for the period till March 31, 2006 is concerned, it will be allowed as a deduction in the five subsequent years in equal installments.