CHEQUE BOOK

HT Estates - - NEWS - Harsh Roongta

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.

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