Anurag was elated that his job helped his family buy a house. Anurag and his father pooled in their savings and purchased this house. They were short of some 20lakhs for which Anurag decided to take a loan and repay from his salary. The house was purchased in his father’s name.
Anurag wants to know how he can claim the deduction for interest paid by him on the home loan and whether he can avail deduction under section 80C towards principal repayments.
Tax Benefits on interest paid and principal repayments, can be claimed when you are –
- a co-owner in the property
- and a co-borrower in the loan
Though Anurag is a co-borrower but he’s not a co-owner in the property. The property is solely owned by his father. In such a situation Anurag will not be able to claim deduction for interest on loan or claim deduction for principal repayments under section 80C. Anurag must try to get his name added in the property and then claim tax benefits.