You can declare revenue tax profit on curiosity for dwelling mortgage taken from my father 

Question: I’m planning to purchase a home for which my father is able to give mortgage. I’ll repay him on EMI foundation (Principal + Interest). Can I declare deductions for this dwelling mortgage? What paperwork I have to undergo Income Tax Department to say deduction of Interest and Principal?

Answer: For claiming revenue tax deductions in respect of principal portion comprised in an EMI, the house mortgage ought to have been taken from specified entities like central or state authorities, any financial institution together with cooperative financial institution, LIC, National housing financial institution, any housing firm, any cooperative society engaged in offering loans for financing building of home, your employer who’s a public firm or public sector firm or any college and many others. Since you might be planning to take the mortgage out of your father you’ll not get any revenue tax rebate in respect of any capital reimbursement of housing mortgage accessible beneath Section 80 C.

However, there is no such thing as a such restriction almost about cost of curiosity on borrowed capital due to this fact it is possible for you to to say the deduction of curiosity payable as much as ₹2  lakh in case the property is self-occupied. In case the property is set free, you possibly can declare full curiosity topic to restriction of most quantity of set off of loss beneath the home property revenue towards different revenue throughout the 12 months as much as ₹2 lakh. Loss not so set off throughout the 12 months is allowed to be carried ahead for set off towards home property revenue in subsequent 8 years. Please observe that the curiosity, which you pay to your father is his revenue and your father must embrace such curiosity in his return of revenue for the related 12 months/s.

You will want a certificates out of your father stating the quantity of curiosity payable for every year, as the identical perhaps demanded by the revenue tax officer throughout the course of evaluation proceedings. Further you’ll have to conclusively show that the cash borrowed was was in truth used for getting the property.

Balwant Jain is a tax and funding skilled and may be reached on jainbalwant@gmail and @jainbalwant on Twitter.com.

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