I own a flat and purchased a second one in February this year. The flat was registered the same month. Can I claim IT benefits on the registration fee paid by me? If yes, how and to what extent? How do I claim IT benefits on the EMI that I am paying for this flat (I have taken 80% loan from bank to finance this loan)?
—Arnab Dasgupta Expenses incurred in respect of registration fee and stamp duty for a house are eligible for deduction under Section 80C within the overall limit of ` 1 lakh. You can get tax benefits on the stamp duty together with other deductions like repayment of housing loan, LIC, PF, etc to a maximum of ` 1 lakh each year.
The overall amount of deduction cannot exceed ` 1 lakh. However, the property on which the stamp duty has been paid should be complete and possession should have been obtained by you during the year. Under the provision of the Income Tax Act, there is no restriction on the number of properties you can take with a housing loan or the number that a person can own. However, in case a person owns more than one property and all are occupied by him or his relatives, the person has to treat one of the properties as self-occupied.
Once the option to treat a particular property as self-occupied is taken, the other property will be deemed to have been let out and a notional income equivalent to the rent expected to be realised on such property will be treated as rental income in respect of the other property.
The annual value of the selfoccupied property is taken at nil and a person is entitled to claim interest payment for loan taken to acquire that property up to a limit of ` 1.5 lakh. He can also claim income tax benefit towards repayment of housing loan within the overall limit of ` 1 lakh under Section 80 C.
In case both the houses are occupied by you, you have to decide which one of the two properties can be treated as self-occupied for the purpose of income tax. I have applied for a home improvement loan from a bank, and it is almost approved. The bank wants me to furnish cost estimates, so that they can give me the amount that I have spent in doing up the house. But I do not have much cash to spend. Is it possible to get the whole amount beforehand?
—Naresh Gupta Some banks sanction up to 75% of the projected cost as loan amount for home improvement. However, before the bank disburses any portion of the loan, you will have to bring in your entire contribution. So once you have spent your contribution in full, you can request the bank to disburse the loan amount directly either to you or in favour of the contractor. I work as a creative director and I am paid in cash. I plan to take a home loan, but I’m asked to furnish my IT returns for the last three years. I do not have these documents but I’m told that if I pay my tax for three years now and submit it as part of my home loan application, along with my cash vouchers, I might be considered for a loan. Is it true? What are my options?
—Amit Kataria For availing any credit facility you will have to prove the consistency of your income. If you are working on contract basis, the amount payable to you is liable for deduction of tax at source if it is more than ` 50,000 per annum. If you have proof of such tax deduction regularly for the past couple of years, it should work. You will need documented proof of your income. Filing of your income tax return in bulk is not going to help you now, as the bank will perceive it as being done just for the home loan. Harsh Roongta is CEO, Apna Paisa. He can be reached at email@example.com