I have taken a loan from my father to buy a property. I am repaying my father by making interest and principal payments. Which documents should be prepared, and whether my employer can give tax benefit on such repayments.
I have taken a loan from the provident fund office to acquire a property. What is the position on tax benefits on loan repayments?
If you have taken a loan from your father/provident fund office to purchase the property, then the interest payable on such a loan is eligible for deduction under Section 24. However, the principal repaid on such a loan is not eligible for deduction under Section 80C as, unlike the deduction of interest, the deduction for principal repayment is available only where the loan is taken from approved sources.
If the property is self-occupied, you will need a certificate from your father/provident fund office, certifying the amount of interest payable by you to him for the loan. Your employer will have to give you the benefit of deduction of interest payable on the loan provided you submit a certificate and verification in this format.
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