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38. Notes to claim exemption on Housing Loan

Notes to claim exemption on Housing Loan

1. Exemption for Interest on Housing Loan is available only for, 'Self Occupied', 'Occupied by Parents' or 'Let Out'

2. Incase of the house is under construction, exemption is not allowed.  If employee is staying in rented house during this period, exemption can be claimed for RENT as regular

3. PRE EMI: Period between the date of Loan sanctioned and Date of property occupied is referred as PRE EMI period.  One fifth of the Interest paid for this period can be added to Actual Interest paid after occupying the property, for sebsequent 5 yrs.  But in any case exemption cannot be more than Rs. 1,50,000/- per year.

4. Interest on Housing Loan qualifies under section 24 of IT rules up to Rs. 1,50,000/- per year

5. Principal on Housing Loan qualifies under section 80C of IT rules which is part of One Lakh investments.  Registration fees and municipal taxes paid for housing loan also qualifies for exemption under this section

6. If sanctioning of loan and occupying the property both happens within the same financial year, no question of PRE EMI.  Whole Interest and Principal can be claimed as exemption

7. If the House on which the loan is availed is situated in different district (or State) from his working place of the employee and employee is staying in rented house at the working place, he/she can claim exemption on both HOUSE RENT and Interest/Principal on Housing Loan.  If both are in the same District, exemption is available on EITHER OR

8. The loan shall be in the name of the employee or employee shall be joint owner.

9. While submitting the proofs for Housing Loan, following documents to be submitted; (a) a Certificate from bank clearly stating the interest and principal recovered during current financial year.  PreEMI shall be clearly shown wherever applicable (b) Form 12C Declaration with necessary information in attachment (c) Proof for occupying property if occupied within current financial year (possession Certificate from the builder/Electricity Bill/BSNL landline bills can be a proof of occupying the property).

10. If the house property is LET OUT, a separate calculation to be made to arrive loss from house property as specified under the Rule of "Income from House Property"