CHEQUE BOOK

HT Estates - - Front Page - Harsh Roongta

I am a de­faulter of two credit cards? How long will my name be in the de­fault­ers list? Can I get a home loan?

—yyy If you have de­faulted on credit card pay­ments, banks are un­likely to grant you a home loan un­less the same is fully backed by tan­gi­ble mov­able i.e. eas­ily en­cash­able se­cu­rity like loan against gold or shares or bank FD. Your de­fault will con­tinue to show in the credit in­for­ma­tion records for at least seven years. You can try and build your credit his­tory by tak­ing a loan or a credit card against fixed de­posits or other tan­gi­ble se­cu­rity such as jew­ellery, shares etc where the lender can give you a loan de­spite your ad­verse credit re­port. By reg­u­larly pay­ing your dues you will be able to re­build your credit his­tory. Mind it that re­build­ing the credit his­tory is a very long and painful process and will take at least 2-3 years be­fore any lender will con­sider giving you a home loan. I plan to fore­close the 10-year home loan of R15 lakh that I took two years ago. What is the tax im­pli­ca­tion? Is there an ideal pe­riod of main­tain­ing a home loan to re­duce tax outgo?

—yyy A fore­clo­sure of home loan ac­count per se does not have any tax im­pli­ca­tion. How­ever, if you sell the house prop­erty within five years from the end of the fi­nan­cial year in which the prop­erty was pur­chased, the de­duc­tion al­lowed un­der Sec­tion 80 C in re­spect of that prop­erty in ear­lier years will be deemed to be the in­come of the year in which the prop­erty is trans­ferred. If you do not sell the prop­erty, the amount of prin­ci­pal paid as part of fore­clo­sure will be el­i­gi­ble for de­duc­tion un­der Sec­tion 80 C within the over­all limit of one lakh ru­pees. There is also a case that fore­clo­sure charges payable, if any, is also de­ductible as in­ter­est un­der Sec­tion 24. Can I take the home loan from a rel­a­tive? What doc­u­ments will be needed for the pur­pose?

—yyy Yes. You can take a home loan from your rel­a­tive and claim tax de­duc­tion ben­e­fits for in­ter­est payable on the loan. The de­duc­tion will be re­stricted to to R1.5 lakh if the house is used for self res­i­dence and full in­ter­est will be al­lowed if the house prop­erty is let out. Please note that no de­duc­tion is avail­able for prin­ci­pal pay­ment un­der Sec­tion 80 C in re­spect of loans taken from friends and rel­a­tives. If re­quired dur­ing the as­sess­ment pro­ceed­ings, you will need to pro­vide proof that the loan given by the rel­a­tive was used for the pur­pose of ac­quir­ing the house prop­erty. You will also need a cer­tifi­cate from your rel­a­tive. I am plan­ning to buy a res­i­den­tial plot, and the con­struc­tion may take another 2/3 years. Can I avail of a house loan, and get IT ben­e­fit on it?

—yyy Yes, you can get a loan from a lender to self-con­struct a house pro­vided you be­gin con­struc­tion within a rea­son­able time frame (say six months) of tak­ing the first dis­burse­ment on the loan. You will be able to claim in­come tax ben­e­fits un­der sec­tion 80C for the prin­ci­pal re­pay­ment and sec­tion 24 for the in­ter­est paid on the hous­ing loan. How­ever, you will get tax ben­e­fit only from the fi­nan­cial year in which the con­struc­tion is com­pleted. If the house is used for self use, the con­struc­tion will have to be com­pleted within three years from the end of the fi­nan­cial year in which the first dis­burse­ment of loan was taken. Oth­er­wise the max­i­mum limit for such de­duc­tion will be R30,000 only.

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