I took a joint home loan for apartment along with by husband in 2018 and were paying pre emi till 2021jan ,in Feb it got converted to emi , possession and registration is yet to be completed by the builder . In this case , how can I claim exemption in this fy ? For emi and pre emi ?

Ans: You can claim the tax benefit on your flat only once the flat is handed over to you by the builder, on completion of construction.

You can claim the deduction for the accumulated pre-EMI interest (while the property is under construction) in five equal installments by adding it to the normal interest of that year.

However, keep in mind that the total interest that you can claim in a year is restricted to Rs 2,00,000.

 

Ans: Please attach the copy of the loan sanction letter otherwise it's a grey area to answer

Ans: Yes, both you and your wife can claim tax deductions on the rental income and the interest paid on the home loan. Since the house is co-owned, the tax benefits can be availed in proportion to your ownership and the EMI contribution.

Claiming Deduction on Rental Income
Proportionate Sharing of Rental Income: The rental income must be split between you and your wife in the ownership ratio, which is 60:40 in your case. Both of you should declare your respective shares of the rental income when filing your tax returns.

Standard Deduction on Rental Income: You can claim a standard deduction of 30% on the rental income. This deduction is allowed to account for maintenance and repair expenses, irrespective of the actual expenses incurred.

Claiming Deduction on Home Loan Interest
Interest on Home Loan: Both you and your wife can claim the deduction on the home loan interest paid under Section 24(b) of the Income Tax Act. The maximum deduction allowed per person is Rs. 2 lakhs per financial year for a self-occupied house. Since this is a rented property, there is no upper limit on the interest deduction for the rented property.

Proportionate Deduction: The deduction on home loan interest should be claimed in proportion to the EMI payments made by each of you, which is 60% for you and 40% for your wife. Ensure that you both claim the interest deduction separately in your respective tax returns.

Principal Repayment Deduction
Section 80C: The principal repayment of the home loan is eligible for deduction under Section 80C. Both of you can claim this deduction up to Rs. 1.5 lakhs each per financial year, again in proportion to your share of the EMI payments.
Documentation and Compliance
Joint Loan Statement: Ensure that you maintain a joint loan statement from the bank or financial institution. This statement should clearly show the EMI payments made by both of you.

Ownership Proof: You should also have proper documentation showing the ownership ratio. This could be the purchase deed or any other legal document indicating the ownership split.

Separate Tax Filings: Both you and your wife need to file your tax returns separately, claiming the deductions in the respective proportions.

Final Insights
By properly allocating the rental income and the corresponding home loan deductions, both you and your wife can maximize your tax benefits. The 60:40 ratio should be consistently applied to both income and deductions to ensure compliance with tax laws.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in