TAXING PROBLEMS IN HOMELOANS
We the couple are planning to buy a flat. We both are employed. Loan will be in joint
names. Both contribute equally towards
repayment, which will be made out of to joint account maintained in lending bank. Are both of us are eligible for tax benefits please
explain?
-Vasumathi and Raghavendra
If the loan is in joint names both the people
contribute towards repayment, both cares eligible for tax benefits
separately. Each borrower may avail the
tax benefits to the maximum extent depending upon their share in the property
repayment. As both of you are
contributing towards repayments equally both of you are eligible for tax
benefits equally.
For example, if the annual interest accrued on Loan
is Rupees two Lakhs each of you may claim a deduction of Rs. One Lakh towards
interest. The maximum ceiling on
interest is Rs. One Lakh Fifty Thousand per individual. In case the annual accrued interest is Rs. Three
Lakhs Fifty Thousand, each of you is eligible for a deduction of interest of
Rs. One Lakh Fifty Thousand and that One Lakh Seventy Five Thousand which is
50% of the total interest.
When required to repayment of principle amount,
the new budget has allowed a maximum amount of Rs. One Lakh to be deducted out
of the total income. However this
ceiling is inclusive various investments like insurance preimium paid,
contributes on to provident fund, investment is specified securities. Both of
you can claim 50% of principal repayment. Up to a maximum of one Lakh ,
including all your investments in the year. IN the total repayment are as one
lakh per annum towards principal, each of you is eligible for deduction of Rs
Fifty thousand out of the total income. The ceiling is Rupees one lakh
inclusive of all investments.
I have purchased a house property 1992-93 for Rs
seven lakhs inclusive of stamp duty and registration charges. Later I incurred
an expenditure of Rs one lakh towards capital improvement of the said house in
the same year. In is proposal to sale the said house in same 2005 for Rs Twelve
lakhs , please explain how to calculate the capital gains on the said house.
Devilal Bangalore.
There
are two types of capital gains, short term and a long-term. Any capital asset
which is hold for less than three years is a short term capital gain; and the
continue difference between the acquisition cash, improvement cash are a sale
price will be termed as capital gain or loss.
However in
your case, as you are holding the capital asset, house for more than three
years, it is a long-term capital gain. Benefits of cost indexation is available
for long term capital gain. Cost indexation is the formula to take care of
inflation. Income Tax Act has prescribed certain inflation index for every
year, with year 1981-82 as the base year for which 100’s the inflation index.
This goes on increasing, the inflation index for the year 2005 – 06 will be
announced by June-July 2005. However, please find the mentioned of
Calculating capital gains if the house is sold
before march 2005.
Before March 2005
|
1.
Cost inflation index for 92-93
Cost inflation index for
2004 – 05
|
223
|
|
2. Cost of acquisition
|
Rs. 7,00,000
|
|
3. Improvement in the same year
|
Rs. 1,00,000
|
|
Total
|
Rs. 8,00,000
|
The total cost has to be divided by inflation
index of that particular year then multiplied by inflation index of the year of
sale
Rs. 8,00,000 x 480 ÷ 223 = 17,21,973
The value
of your house as pay cost inflation index is Rs. 17,21,973. Since you are selling for Rs. 12,00,000/- you
are incurring a loss of Rs. 5,21,973. You may calculate actual capital loss by
using cost inflation index for the year 2005 – 06, where the capital loss will
be more.
more,
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