What type of tax relief can I get if I take home loan ?
You can deduct the interest upto Rs 2 Lakh irrespective of the fact if the house is self occupied or rented .
Apart from that the principal amount paid in a year is allowed to be deducted from gross total income u/s 80C.
Remember , the maximum deduction u/s 80C is Rs. 1.. 5 Lakh
Can I get tax deduction from the year of taking loan ?
No , tax deduction u/s 24 from income of house property is allowed when the house is completed . If you buy a ready made house, you can claim tax deduction of interest from the year of purchase itself .
However, deduction of principal amount repaid to home loan company can be deducted from the year of receipt of loan.
If my house is built in two years , what happens to interest paid for those two years?
As per law, interest paid before the year of completion of the house shall be added and will be allowed in four installments starting from the year of completion of house.
So , for example say you bought the house in FY 2013-14 and house was completed in FY 2015-16. Total interest paid as on 31st March 2016 as under :
FY 2013-14 1,00,000 15,000
FY 2014-15 1,00,000 20,000
FY 2015-16 1,00,000 25000
Then , Rs 50,000 (the Rs 1,00,000 + Rs 1,00,000= Rs 2,00,000 ) is to be allowed as deduction u/s 24 from FY 2015-16 till FY 2018-19 .
So, total deduction that is allowed in FY 2015-16 is Rs 1,50,000 ( Rs 1,00,000 + Rs 50,000) .
Is there any time limitation within which house must be constructed ?
Yes, house must be constructed within 3 years from the end of financial year in which loan was taken.
If house is not constructed within 3 years , the deduction is restricted to Rs 30,000 only.
I am planning to buy house jointly with my wife ? Can both of us claim deduction of interest and principal separately.
Yes, both of you can claim interest deduction up to Rs 2,00,000.
In this respect , please note that if the investment is only by the husband, wife cannot claim deduction for either interest or principal.
However, if both the husband and wife shared equally the burden of payment of loan , then both can claim the deduction of interest in proportion of their share in loan repayments.