You and your spouse are co-borrowers on a home loan account. Your spouse, though, is not a co-owner. Can s/he claim tax benefits?

Will home loan rates come down in the near future after having risen for the past two years? What amount of your home loan can you prepay without attracting the prepayment penalty?

Can you claim exemption on HRA received as well as deduction of interest payable on the home loan?

Home loan expert Harsh Roongta answered these and other home loan related queries in a chat with Get Ahead readers on March 13.

For those of you who missed the chat, here is the transcript.

Part I -  Prepay home loan to save on interest

mursul asked, How much percentage we can take in total cost of house?

Harsh Roongta answers, Typically banks allow loans upto 85-90% of the value of the property. This is off course assuming that your income also allows that kind of a loan.

sS asked, What is u r prediction? Whether home loan intrests will come down?

Harsh Roongta answers, The only thing that I can predict with almost complete certainty is that interest rates will definitely come down. The problem is in predicting when it will do so.

Pavaman asked, I have a home loan already for which I'm having IT benefits. I'm taking one more home loan along with my brother (joint applicants), Can I avail the IT benefit for that too? Are there any other implications?

Harsh Roongta answers, Contrary to popular opinion there is no overall restriction of Rs 1, 50,000 on the interest payable on a loan taken to acquire/construct a house property or in respect of more than one property. In fact, this deduction is available for any number of properties and is without any limit under specific circumstances.

The calculation of income from house property (which means the rent you earn) has to be done separately for each property owned by a person and the home loan repayments are eligible for deduction for each such property. The deduction for interest payable on a loan taken to buy/construct house property (ies) (if you have more than 1) is not subject to any overall limit.

As explained earlier, the limit of Rs 1, 50, 000 is applicable only while calculating the income from one self occupied property. For a detailed response and a working example, log on to www.apnaloan.com. Or, you can click on the link below: http://www.apnaloan.com/index.php?option=com_content&task=view&id=125&Itemid=2&limit=1&limitstart=4

satish_nk asked, I have joint home loan in my and my wife's name. What is procedure for sharing the interest as well as the principal portion for tax calculations?

Harsh Roongta answers, Both of you will separately be eligible for tax benefits on the home loan repayments in proportion to your share in the loan. If the property is self occupied the limit of Rs 150,000 will be available to you individually (i.e. total deduction will be limited to Rs 3,00,000/- in such a case).

suresh asked, Dear Sir, I took a loan of Rs 7 lacs and am left with Rs 6.13 lacs. At present i'm expecting Rs. 4 lacs. My banker says that only 25% on outstanding amount can be made as maximum amount. Please suggest how to go about this?

Harsh Roongta answers, what he probably means is that you can prepay only that much without a pre-payment charge. The balance amount may attract a pre-payment charge.

sanjay asked, Hi Sir, I come to know that, if personal loan is taken for downpayment of home, then I can get tax exemption, so does it comes under 80C i.e. Rs 1 lac slab or 80D i.e. Rs 1.5 slab where interest for home loan is taken into account.

Harsh Roongta answers, Both. Interest is available under section 24 (limit of Rs. 150000 for self occupied property) and principal under section 80C (maximum limit Rs. 100000)

rkumar asked, The land is in my name. But the house construction loan was taken in my wife's name (principal) and myself as a co applicant. shall we both enjoy the tax benefits? If yes how?

Harsh Roongta answers, Your wife cannot get any deductions if she is not a co-owner in the property. Just being a co-borrower does not give any right to claim this tax benefit.

aneesh asked, Sir, If i take 20 Lac loan . How much will be my monthly EMI?And my annual CTC is 3.6 lacs, How much is my loan eligibility?

Harsh Roongta answers, you have not stated your age but assuming you are less than 38 years old you can get a 20 year floating rate loan of around 10% of max around 15 lacs only. see loan eligibility calculator on http://www.apnaloan.com/index.php?option=com_calculators&task=advancedhomeloan

hassain asked, sir, iam an NRI I HAVE TAKEN A HOUSING LOAN FROM SBI, (14 LAKHS) I AM REPAYING REGULARLLY , I WANT TO BUY VACANT SITE BUT SBI REFUSED TO GIVE LOAN FOR ME STATING THAT NO PROVISION FOR NRI TO BUY VACANT SITE . THEY ALSO REFUSED TO GIVE ME PERSONAL LOAN SINCE I AM NRI SO GUIDE ME HOW CAN I GET LOAN , WETHER NRI IS NOT ELIGIBLE FOR ANY LOAN EXCEPT HOUSING LOAN?

Harsh Roongta answers, There is no legal bar on a NRI to get a site loan ( i am asuming that it is not agricultural or plantation land). However the bank itself may not be comfortable providing such a loan to NRIs.

You can approach other banks or market places like apnaloan.com to get your requirements. Just a small word of warning though. Site loans are more difficult to get and unless the site is being developed by a statutory body or by an builder approved by the bank this loan may not be available. You can also consider the option of obtaining an unsecured personal loan though that is more expensive.

sanotp asked, Sir, I have a home loan of 16.5 lakhs with 9% floating. I need 3 lakhs more for interior and registration. If I increase the home loan by 3 lakhs, the EMI will get increased drastically. Is it advisable to go for a personal loan for 3 lakhs or to increase the home loan ?

Harsh Roongta answers, If it is possible to increase the home loan (assuming that the property value allows it as most banks restrict home loan value to 85% of the property value) then you should definitely go for it as personal loans are more expensive and also they are for a shorter period because of which the outflows in the initial years while the personal loan is being paid off will be very high.

Gaurav asked, Dear Mr. Roongta, I have taken home loan for a flat. I will get the possession in June 2009. Can I claim for Income Tax benefit before I get possession of flat or not?

Harsh Roongta answers, No. The first year in which you will get any benefits is the financial year ending on March 31, 2010 assuming that possession is handed over before that.

s asked, Sir, I heard that banks are not giving home loans at this time since they have to put the 150% of the loan amount with RBI..because of some RBI regulations...Is it true? Please advise what's the current state on this?

Harsh Roongta answers, All banks are still giving home loans though there is a slowdown because of high interest rates and high property prices.

srikanthpreddy asked, I am planning to take 10 L home loan in Bangalore. Suggest me which bank is good to take loan?

Harsh Roongta answers, There is no such thing as a "best bank" for a home loan. If that was true then all other banks would be out of business. The lender of choice for you will depend on who you are and what your needs are.

George asked, Sir, How do developed countries like US, UK and better developed countries like Malaysia, Singapore etc manage to keep their interest rates around 6%??

Harsh Roongta answers, Interest rates in an economy are a function of number of complex factors hence absolute comparison of interest rates across countries may not be correct.

amit123 asked, I'll be taking a housing loan this year for around 25L, but i'll be getting the possession of the house in mid 2009. Will i be getting the tax benefit on the loan interest for this financial year (2007-2008)?

Harsh Roongta answers, no

SKV asked, I have purchased a residential house, while I continue to stay in a rented place in my current city of residence. I have no plans to move to the new house. I pay interest on the loan taken to purchase the new property, which I understand is deductible for Income Tax. Can I claim exemption of HRA received as well as deduction of interest payable on the home loan?

Harsh Roongta answers, Contrary to popular opinion, there is no restriction under the I-T Act to get both. Many salaried consumers take a home loan to acquire a residential property, but do not stay in that property for various reasons. They stay in rented premises for which they pay rent. If they are receiving a house rent allowance from their employer, a question frequently arises is- whether they can claim exemption of their HRA based on the rent actually paid by them as well as the interest payable on the loan taken to acquire the owned property.

This is such a widespread question that it rightly justifies an elaborate reply of this kind. If some portions of the reply are difficult to understand don't worry. The technical portion of the reply really needs to be understood by your HR Department so that they can give you the benefit while calculating the amount of tax deductible at source from your salary.

You can also get this benefit while paying the advance tax on your business income. The exemption of HRA is covered under section 10 (13A). Let us now turn to the deduction of interest payable on a home loan. The interest is not a straight deduction allowed from the salary income. The deduction is actually allowed while calculating the "Income from House Property". The effect, in the case of self occupied property is the same as allowing it as direct deduction from salary income. The relevant sections are section 22 to section 27. 

Harsh Roongta says, okay friends. Let's stop this while i can still type. Hopefully this was useful for you. I thorughly enjoyed it. Please see the transcript of this chat for further details or you can also log on to www.apnaloan.com for any specific queries. See you next fortnight.

Part I -  Prepay home loan to save on interest