Mahesh took a home loan of Rs 20 lakhs from ICICI Bank to buy a fully constructed house and the total loan amount was paid to the vendor on Feb 6, 2008. The bank charged me a pre-EMI interest for the month of Feb 2008. The pre-EMI interest is only for the period between Feb 6 and (probably) March 1 (or whatever date the instalment date was in March). The first EMI would then be payable on Feb 1, 2008 (or in your case, whatever date the instalments is payable every month). The bank has lent the money to you on Feb 6, 2008 and the first monthly instalment will be due only in Feb 6, 2008 which contains interest only for one month. Hence the need for ICICI Bank to charge you a pre-EMI interest on your loan.
Plot loans are available on a more restricted basis than home loans and unless your builder is approved by the bank it may not provide a loan for a plot bought from a private developer. No tax deductions can be availed on this type of loan.
Mahesh took a joint loan with my brother of Rs 10 lakh. Interest amount of Rs 1,10,000 and principal of Rs 25,000 was paid. How much exemption will we both get?
SP Soot
Both of you will get the tax deduction benefits to the extent of your share in the loan.
The author is CEO apnaloan.com which is a complete guide to home loans in India.
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