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Hi Raag,

Do you have any article on Vehicle Finance.

Regards,
Ketan

Hi,

I did not have an article on Vehicle Finance, but its an interesting topic. Thanks for asking!

I have written an article on auto loans based on your question - you can find it here: An Introduction to Car Loan / Auto Loan / Vehicle Finance.

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Dileepkumar
Jul 30, 2008 		Pre payment of home loan

Helo,

I have a home loan of Rs.800000.00 ,and my brother who is an NRI is ready to pay all home loan amount from his NRE account.Is there any tax burden to me if my brother pay all balance loan amount?
raagvamd
Jul 31, 2008 		Re: Pre payment of home loan

Hi Dileepkumar,

There would be no income tax or gift tax liability on you or your brother.

But you need to be clear about the modality:

Your brother would have to give Rs. 8,00,000 to you as a gift, and then, you can pay back your home loan.

This will ensure that there is no tax: gifts given to a sibling do not attract gift tax.

I would suggest that you prepare and execute a gift deed, and make this a formal arrangement - this would help you answer any tax related queries later on.

This is especially important because the amount involved is large.

As a side, I hope you are aware that most banks charge a pre-payment panelty when you do a foreclosure of home loan (that is, pre pay the entire outstanding amount). This is in the range of 2%, but it would be better if you confirm with your bank.
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i have taken a home loan jointly in my name and my brother's name. if the interest paid in a year is Rs. 3 lacs, will both of us get tax benefit of Rs. 1.5 lacs OR will we get tax benefit of 75000/- each ?

Hi,

Both of you can claim deduction of interest upto Rs. 1.5 Lakhs each, which is the upper limit per person.

The claim should be in proportion to the repayment of the loan.

For example, if both of you have repaid the EMIs for 6 months each (50% each), both of you should claim 1.5 Lakhs as interest paid (50% each).

But if you have paid 8 EMIs (67%), and your brother has paid 4 EMIs (33%), even the interest needs to be claimed in the same proportion.

Thus, your portion of interest paid would be Rs. 2 Lakhs - 67% of total interest of Rs. 3 Lakhs. Of this, you can claim Rs. 1.5 Lakhs, as that is the upper limit per person.

Your brother's share would be Rs. 1 Lakh - 33% of the total interest paid, which he can claim fully (as it is below the limit of Rs. 1.5 lakhs).

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