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A foreclosure of home loan account per se does not have any tax implication.

Written by Harsh Roongta | Published: September 10, 2011 3:45:42 am

I plan to foreclose the 10-year home loan of Rs 15 lakh which I took two years ago. What is the tax implication? Is there an ideal period of maintaining a home loan to reduce tax outgo?

— Ashish Kumar,Ghaziabad

A foreclosure of home loan account per se does not have any tax implication. If you sell the house within five years from the end of the financial year in which the property was purchased,the deduction allowed for the repayment of the loan principal in earlier years will now be deemed the income during the year the property is transferred. Please note that there are no such tax implications in respect of deduction in respect of interest allowed in earlier years. The amount of principal paid as part of foreclosure will be eligible for deduction within overall limit of Rs 1 lakh.

My father has taken home loan from SBI. For that I am the surety holder. Now for my income tax benefits I would like to take home loan from other bank by keeping my father and me as co-borrowers. Is it possible to transfer my father’s existing loan to this new loan?

—R K Mishra,Faridabad

Yes it should be possible to shift the loan to another bank and have you as a co-borrower rather a guarantor provided the repayment track record is good and all other parameters are satisfactory. It seems you are not a co-owner in the property. If you are not a co-owner you cannot get any tax benefits not withstanding the fact that you are a co-borrower even when you shift the loan to another bank.

My husband and I have a home loan of Rs 15 lakh for 10 years. I would like to buy another house,but at the same time would like to quit my job. What are the chances of a loan getting sanctioned?

— Pooja Talwar,Gurgaon

If you quit your job,it is very unlikely that any lender will give you any loan as the eligibility for a home loan is determined on your income,its continuity and repayment track record. If you have an earning spouse,you might be able to get a loan based on his income provided he joins you as a co-borrower. However,if you are quitting your present job and for another one immediately,this will not have impact on the loan eligibility.

My take home salary is nearly Rs 25,000 per month. Is it possible to get 100 per cent finance for the maximum tenure?

— Ritu Chadha,Ambala

Typically,banks provide only up to 80 per cent of the cost as loan. The amount of loan that you can get depends on annual income and banks will not lend you beyond this even the value of the property is significantly higher. If you are less than 40 years of age you should be eligible for around 4 – 4.5 times of your gross annual income as loan.

— The expert is CEO,
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