Taking a new loan too would not help, as your wife would still not satisfy the first condition to the requirements mentioned above. I don’t see any way out. However, if your finances would allow and you wish to consider this option, you may consider going for a new home loan in your wife’s exclusive name. Do not become the co-owner of this new house yourself, for you may end up being taxed on the second house property. You may, however, become a co-applicant to the home loan and contribute to the repayment of the loan.

I have taken a home loan for the construction of a house on a land that I own. The bank has disbursed part of the loan in the financial year 2008-09. However, I have not been able to commence the construction. I am paying interest on this amount. Can I show this in my income tax return and claim tax benefit?

(Via Email)

You cannot claim the tax benefit on the home loan repayment till the time you have the concerned house property. Since you are yet to start the construction, you clearly do not have a ‘house’, and therefore you are not entitled to any tax benefit on this account.

Do note that the interest paid during the financial year 2008-09 is paid before the completion of construction of the house property. As such, though you are not entitled to any tax benefit on this account at the moment, all such interest that you pay shall be accumulated till the year before the completion of the construction and shall be allowed in five equal installments commencing the financial year in which such construction or purchase is completed.

... contd.