I work at a nationalised bank and have taken a loan of Rs 12,00,000 under concessional rate. I have also availed a loan of Rs 5,50,000 at market or public rate of the same bank. For both advances, I am the main borrower and my husband is co-applicant. Our house is jointly registered and for repayment of loan both of our salary is taken into consideration so that advances should not be NPA.

At present, I am claiming interest exemption for house property on my staff housing loan and the loan repayment is done in my salary deduction. My husband is repaying the second loan that is at market rate of Rs 5,50,000.

He is claiming income tax exemption for that part of interest on loan. Since my tax exemption limit on interest for staff housing loan is in excess of my salary drawings, may I utilise the remaining amount for my husband’s tax exemption limit?

Otherwise let me know why it is not allowed, since I had availed the housing loan by computing both our salaried incomes together.

- Sujatha

For claiming a deduction in respect of interest payment towards housing loan under section 24 of the Income Tax Act, 1961 (“the Act”), income from such house property should be chargeable to tax in the hands of the individual as an owner and loan should be repaid by the individual as a borrower of loan.

As you are aware, for Self occupied property (SOP), the deduction towards the interest payment is restricted to Rs 1,50,000 a year. Further, according to the provisions of section 26 of the Act, in respect of joint ownership, where the share of each co-owner is definite and ascertainable, the concessional tax treatment in respect of SOP should be applicable as if each such person is individually entitled to such tax deduction of Rs 1,50,000 a year.

Though not specifically provided, share of each co-owner is generally determined by the capital invested by each of the owner. In your case, as the SOP is jointly owned by you and your husband and two separate loans have been availed by each of you for this property, you and your husband should be able to individually avail the deduction up to cap of Rs 1,50,000 in respect of interest payment made by each of you separately on your respective loan amounts i.e. Rs 12,000,000 and Rs 550,000 respectively during the Financial Year (FY).

Therefore, interest on the principal to the extent paid by each of you should be availed as a deduction in your respective personal tax return. Accordingly, your husband would be unable to avail the deduction in respect of interest paid by you on housing loan of Rs 12,00,000 as that funding has been done exclusively by you. There is also a provision whereby if the loss from the house property could not be offset against the other income in a particular FY, then such loss could be carried forward up to eight subsequent FYs for offset against “Income from house property”.

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