Transferring loans

Please let me know if I have missed out on some important aspect.

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Your wife currently your fiancée would need to satisfy all the following conditions in order to become eligible for claiming the tax benefit on account of the home loan:

She should be the co-owner of the property. She should be the co-applicant to the home loan; and she should be contributing to the repayment of the home loan

To satisfy the first condition,you will have to transfer a part of the property in her name,do all the paperwork and pay for the stamp duty etc,and register the flat in her name. This,in my opinion,is going to be a costly affair,considering the amount of tax benefit that you are looking at. A simple agreement may not satisfy the tax authorities dont let anybody misguide you on this as such ploys are generally employed to save the tax bill. This is tax avoidance,which is considered illegal,as against tax planning,which is legal if you can prove it.

Taking a new loan too would not help,as your wife would still not satisfy the first condition to the requirements mentioned above. I dont see any way out. However,if your finances would allow and you wish to consider this option,you may consider going for a new home loan in your wifes exclusive name. Do not become the co-owner of this new house yourself,for you may end up being taxed on the second house property. You may,however,become a co-applicant to the home loan and contribute to the repayment of the loan.

I have taken a home loan for the construction of a house on a land that I own. The bank has disbursed part of the loan in the financial year 2008-09. However,I have not been able to commence the construction. I am paying interest on this amount. Can I show this in my income tax return and claim tax benefit?

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You cannot claim the tax benefit on the home loan repayment till the time you have the concerned house property. Since you are yet to start the construction,you clearly do not have a house,and therefore you are not entitled to any tax benefit on this account.

Do note that the interest paid during the financial year 2008-09 is paid before the completion of construction of the house property. As such,though you are not entitled to any tax benefit on this account at the moment,all such interest that you pay shall be accumulated till the year before the completion of the construction and shall be allowed in five equal installments commencing the financial year in which such construction or purchase is completed.

Do remember to obtain and keep a certificate of interest payment from your lender for each such year in which you pay the interest. You may need it at the time of claiming the deduction.

I have taken a home loan in the year 2006 for the purchase of a house where my parents and sister are living now. The loan is in my sole name. I stay in a rented home in some other city due to my job. Will I be taxed in any way for owning the house? Can I show the home loan for getting the tax exemption on principal and interest paid?

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The income tax law specifies that if you own a house that could not be occupied due to your employment in another city and no other monetary benefit is derived from such house,then you are entitled to claim the same as self-occupied. The annual value value for the purpose of income tax shall be taken as NIL and it shall not be deemed to be let out as well.

You can claim the income tax benefit on the home loan repayment as you have been doing so every year.

The author is a chartered accountant.

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