My wife and I have taken a housing loan for a property, which is in the name of my wife. My wife is the applicant and I am a co-applicant. My wife does not have any income. The loan was sanctioned based on my salary income and I am paying the EMI.

Can I claim the interest and principal repayment as deduction while computing my taxable income? Am I eligible to claim exemption on the house rent allowance if I pay rent to my wife for the property? — C.J. Bharanidharan

From your query it is not clear if this property came to be acquired by your wife. If the property was acquired only out of borrowed funds where the EMI is paid by you and the balance is out of your sources, given that you have stated that your wife has no income, it will mean that though the property stands in the name of your wife, the clubbing provisions in section 64(1) would apply and the income from the property will have to be assessed only in your hands.

You may note that income will include losses. Therefore, the loss computed under the head income from house property can be claimed by you as deduction as the income or loss from the property will be assessed in your hands.

Deduction under section 80C will be available to you as far as principal repayment is concerned.

If you pay rent to your wife to claim that as deduction, the rental income will get clubbed in your hands. This nullifies any gain you will get out of claiming deduction. .

I have constructed a house after taking a bank loan and am claiming the interest paid on the housing loan as deduction. I purchased another plot along with my wife and we are constructing a house after taking a loan in both our names, me being the first applicant. The house will be ready for occupation by March 31, 2011. The EMI will be paid by me.

Am I eligible to claim the entire interest paid on the second housing loan as deduction while calculating my taxable income or can I claim the deduction only proportionately as the property is jointly owned by us and the loan is availed jointly by us? I propose to show the first house as being let out. — Rajesh P.

The claim for interest on the housing loan taken for the second property will depend on who is the owner of the property. If you are the real owner, though the property can be registered in your name and in the name of your wife, the interest paid can be claimed as a deduction only by you subject to the limits specified under section 24.

If on the other hand you are joint owners in the real sense, the claim will have to be made proportion to your ownership in the property subject to the overall limits specified under section 24.

I purchased a property in Ghaziabad for self-occupation. The property was registered in October 2010 and possession was taken.

The cost of the property, stamp duty and registration charges were financed through a housing loan from State Bank of Travancore.

I will be claiming deduction under Section 80-C of the principal repayment and under section 24 of the interest paid during the year. Please clarify if the stamp duty and registration charges will qualify for additional deduction under section 80C. — Mayank Sharma

In your case, though the stamp duty and registration charges have been paid out of borrowed funds, the amount will be allowed as a deduction. Independent of this, the principal repayment and interest paid to the bank will qualify for deduction under sections 80C and 24 respectively.

The investment for the purpose of claiming exemption under section 54EC against the long-term capital gains cannot exceed Rs 50 lakh in a financial year.

Is there any additional relief in case of senior citizens? — Bina

No additional relief is available to senior citizens in such cases.

Can I show the profit or loss from futures and options under the head capital gains? — Dr R.K. Goel

Profits and losses from futures and options cannot normally be treated as taxable under the head capital gains. Futures and options by their very nature are transactions where there is a speculation as understood in normal connotation and cannot be understood to be an investment.

Given the nature of transactions in futures and options, the charge should arise in respect of a profit or loss only under the head profits and gains of business or profession.

Related Topics
comment COMMENT NOW