I would like to know what is included in the value of the property. Does it include all these (in addition to the basic sale price): car parking charges, PLC, club membership, lease rent, fire fighting charges, external electrification charges, interest-free maintenance, etc?
—Yogendra Yadav This would normally include benefits that are of enduring nature such as parking lot charges, club membership fee if the same is connected with ownership of your flat. However, it will certainly not include items like interestfree maintenance charges, fire fighting charges, lease rent etc. For calculating the maximum loan amount as a percentage of the house value, only the cost mentioned in the agreement is relevant. So, the price of the house plus price of the parking slot, (if mentioned in agreement), will be taken into account while calculat-
I am going to take a loan from LIC for a plot for which my mother and I are registered as co-owners. I want to construct a house on the plot but I will have to go in for a loan. It will be only in the next financial year. Can I show the loan amount for the plot with the construction amount for tax benefits?
—Shivendra Singh Yadav No tax benefits are available on a pure plot loan except that you can capitalise the cost of the interest on the loan for the plot. You have to start the construction of the house within a reasonable time to be able to get a loan on the cost of construction, including the cost of the plot. Such loans are popular- ly known as composite loans. You can always get tax benefits in respect of construction loan. It is debatable, however if the same can be taken for a separate plot loan taken for this purpose. The income tax department, too, can take a contrary view on this. In case the loan is granted by the bank on the value of the cost of construction, including the cost of the plot, you will be able to claim income tax benefits in respect of interest payments as well as for repayment of loans. The deduction will be available from the year in which the construction is completed.
For the interest paid prior to completion of construc- tion, you will be able to claim interest in five equal installments beginning from the year of completion of the house. However, any repayment of principal portion of the loan made during the construction period does not enjoy any tax benefits. If the property constructed on the plot is used for your own use, the limit for deduction will depend on the following: If the construction is completed within three years of the end of the financial year on which the plot loan was first taken then the limit for deduction every year shall be R1, 50,000, else the limit is R30, 000 a year.
I have taken housing loan which will get over this year. I want another loan from the same bank and pay it in two years. a) Is there a provision for such a loan? b) Can I get IT exemption on interest and principal for such a loan?
—Ramendra There are no restrictions on the number of loans as long as you are eligible for it. You can even take another loan before the existing loan gets repaid. Getting tax benefits on such a loan will depend on why you have taken it. If used for repairs or reconstruction of a house you will be able to claim deduction for the interest on the loan.