CHEQUE BOOK

HT Estates - - Front Page - Harsh Roongta

I am in the process of tak­ing home loan with my wife de­clared as the first ap­pli­cant (as in­ter­est rate is lower if first ap­pli­cant is a fe­male) and me as the co-ap­pli­cant. Prop­erty will be reg­is­tered only in wife’s name. How­ever, only my salary has been con­sid­ered (be­cause my wife is a housewife) while de­cid­ing loan el­i­gi­bil­ity and I only would be paying the EMIs. I just wanted to be sure that with me not be­ing the first ap­pli­cant would my tax ben­e­fits be af­fected? Could I still show (even when I am the co-ap­pli­cant and not the first ap­pli­cant) the fol­low­ing: 1) R1,00,000 of hous­ing loan with a max­i­mum limit un­der sec­tion 80C, and 2) R1,50,000 of in­ter­est on home loan un­der sec­tion 24. My wife is a housewife and the loan amount EMI will paid by me, so could I get the whole 100% of tax ben­e­fit?

—Hitesh Ma­lik If you are not a owner or co-owner in the prop­erty then you will not be el­i­gi­ble for any tax ben­e­fit on the loan re­pay­ment and in­ter­est pay­ments even though you may be a joint bor­rower and the loan might have been given based on your salary. This is the case even if it is fully be­ing re­paid by you. So make sure that you are a co-owner in the prop­erty if you wish to claim tax ben­e­fits. It does not mat­ter whether your name is first or sec­ond as bor­rower. It would be ad­vis­able to en­ter into a small agree­ment with your spouse mak­ing clear that the ben­e­fi­cial own­er­ship is in the ra­tio of con­tri­bu­tion to the cost of the prop­erty. If you are con­tribut­ing the en­tire down pay­ment and the loan is en­tirely be­ing re­paid by you then you are 100% ben­e­fi­cial owner not­with­stand­ing the fact that your wife’s name is first in the own­er­ship doc­u­ment. In the quest to save some money on in­ter­est and/or stamp duty please don’t jeop­ar­dize your tax ben­e­fits. I have got my home loan sanc­tioned jointly with my wife this month for R25.50 lakh, can we get R2.5 lakh tax free on in­ter­est?

—Kis­han Lal The ben­e­fit of en­hanced tax ben­e­fit of in­ter­est on home loan as pro­posed in the bud­get is avail­able to the per­sons whose loan is sanc­tioned be­tween April 1, 2013 and March 31, 2014. Since your loan is al­ready sanc­tioned you will not be able to avail of the ben­e­fit. More­over, the ben­e­fit is avail­able for loans up to R25 lakh where the value of the prop­erty does not ex­ceed R40 lakh. You would not have been able to claim the ben­e­fit in any case. How­ever, both you and your wife can sep­a­rately claim de­duc­tion for in­ter­est payable on the loan in the pro­por­tion of the loan showed by both of you and that it­self is likely to give you full ben­e­fit for de­duc­tion of in­ter­est. In 2003 I pur­chased a 1BHK flat at Khari­gaon, Kalwa Thane, for R5,11,839. The sale agree­ment is dated May 5, 2003 and the pos­ses­sion date is Fe­bru­ary 24, 2006. I sold the flat on De­cem­ber 31, 2012, for R33 lakh. How much does one need to pay as cap­i­tal gain tax or oth­er­wise?

—Ashok Since you have held the cap­i­tal as­set for more than 36 months the cap­i­tal gains aris­ing on sale will be treated as long-term cap­i­tal gains. The long-term cap­i­tal gains will be cal­cu­lated by re­duc­ing the in­dexed cost from the sale pro­ceeds.

Since your pur­chase cost is R5,11,839 and since you had be­come the owner of the prop­erty in 2005-2006, the in­dex­a­tion ben­e­fit will be avail­able to you from that year. The cost in­fla­tion in­dex for that year was 497 and you sold this prop­erty on De­cem­ber 31, 2012, when the cost in­fla­tion in­dex was 852; your in­dexed cost comes to R8,77,436. Based on your sale pro­ceeds be­ing R33 lakh, your long-term cap­i­tal gains on the same would be R24,22,562 and your long-term cap­i­tal gains tax at 20% would be R4,93,234 (in­clud­ing the ed­u­ca­tion cess at 3%).

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