Is there any income tax benefits applicable if your house is under construction? Or do the benefits start after the ready possession? can loans be taken and tax deductions claimed during the construction period? thanks
RE:House under construction
by Amitabh on Jun 10, 2007 10:39 AM Permalink
The benefit of principal deduction under sec 80C can be claimed once the construction is complete.For interest,the deduction of interest for pre construction period is available but in 5 equal annual instalments begining with the year when construction is complete.
1.I have a house in chennai where I have closed the loan and am using the house as an office for my partnership firm. If I buy another house with a housing loan, can I avail the tax deduction of 150,000 ? Also, would any tax have to be paid in the first house. I receive no rent from the first house.
2. My wife has two houses, one is let out and the other is self occupied. I have closed the loan in the first house while the self occupied house, the loan is still running. She is an assessee but does not have any taxable income this year. Should I close the loan in the self occupied house ? Please advice Thanks.
RE:Need clarification
by Amitabh on Jun 10, 2007 10:48 AM Permalink
1.In this case,ideally you should receive rent from partnership firm.For the rent,you will be taxed and the firm can claim deduction as this is business expense for it.This is because,if you have two houses,only one,as per your choice will be treated as self occupied.For the other,you will be taxed as if it is on rent(on fair rent in that area for similar house) and the provisions of law will apply accordingly.For the house that is treated as self occupied,you will get interest deduction upto Rs 1,50,000 and for the house that is on rent or deemed to be on rent,you will get interest deduction without any limit,on the entire interest accrued for that year. 2.It is not advisable to close the loan as deduction of Rs 1,50,000 on interest is still avilable and it can be set off against the income from the other house.Even if it cannot be set off fully in that year it can be carried forward and set off against income from house property in later years (upto 8 assessment years).You just said that one house of your wife is on rent,so that rental income is taxable.She can claim the set off of interest from this rental income.
I purchased a flat in Bangalore and also planning to get a flat in chennai. My parents stay in chennai only. So, i'm plaaning to rent the chennai flat and the bangalore house to be self-occupied. Both will be in housing loan. What is the best possible way to reduce tax payable. Any suggestions? I'm not very sure / clear about the interest deductable with second house?
RE:need clarity
by Amitabh on Jun 06, 2007 02:51 PM Permalink
If your Chennai flat is on rent and Bangalore flat is treated as self occupied you will get interest deduction on Chennai house for the amount of interest accruing for the year without any limit and for bangalore house upto Rs 1,50,000.
RE:need clarity
by Amitabh on Jun 07, 2007 03:16 PM Permalink
Deduction of principal is allowed under Sec 80C within the overall limit of Rs 1 lac only alongwith the deduction of all other eligible investments like PPF,life insurance,equity linked saving scheme,tutuion fees for children,NSC,etc.
1. I have taken a housing loan, for which i pay annual principal of Rs.48768 & Interest of Rs.66235 I get annual rent upto Rs.150000/- from this house.
2. I have also taken a plot loan for which i pay an annual interest of Rs.267072.
3. I stay in Rented house by paying a rent of Rs. 144000/- per annum
How do I claim tax benefits for all. I am salaried person
RE:home loan Plot loanq
by Amitabh on Jun 06, 2007 03:00 PM Permalink
The pointwise reply is as follows 1.The annual principal will be deductible under Sec 80C within the ovarall limit of Rs 1 lac along with other investments.The interest will be fully deductible while computing income from house property. 2.No deduction of interest for plot of land.Once the construction of the house thereon is complete,interest for pre construction period will be allowed in 5 years in equal instalments begining with the year in which construction is complete. 3.For rent paid by you,if you get HRA,then also provide us the figure of HRA received by you and also your salary on which your mandatory PF contribution is calculated.If you do not get HRA,you will get deduction under Sec 80GG upto Rs 24000 per annum.But for that you or your family members should not own any residential accommodation where you reside and also,you,yourself,should not own any residential accommodation which is treated as self occupied under income tax law,anywhere.
