CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta

How and from where can I get a loan for con­struct­ing com­mer­cial prop­erty? I want to con­struct a com­mer­cial space on a piece of land and give it on rent later.

— San­deep Sax­ena Lenders are hes­i­tant in fi­nanc­ing a self-con­structed com­mer­cial project de­vel­oped by an in­ex­pe­ri­enced per­son. If you own any other res­i­den­tial or com­mer­cial prop­erty, you can eval­u­ate the pos­si­bil­ity of tak­ing the loan against such prop­erty. This will be avail­able upto 50%to 60% of the prop­erty’s mar­ket value. A loan against prop­erty will be avail­able at a rate of around 11.75% to 15.75% per an­num. This will be capped to around twice the an­nual in­come dis­closed by you. It is avail­able for a ten­ure rang­ing from five years to 15 years. I pur­chased a prop­erty in June 2013. Now I want to sell it. I want to know how much prop­erty gains tax is ap­pli­ca­ble and how can I re­duce the same. The prop­erty has been bought against a loan so what­ever in­stall­ments I have paid till date can be ac­counted in my cost. Can the stamp duty reg­is­tra­tion, so­ci­ety trans­fer, loan pro­cess­ing fees, mort­gage deed, etc also be con­sid­ered as part of the flat cost?

— Am­ruthraj Since the prop­erty has not been held for more than 36 months, any profit made on sale of this prop­erty shall be treated as short-term cap­i­tal gains and shall be added to your reg­u­lar in­come and will be taxed at your ap­pli­ca­ble slab rate.

You can in­clude the cost of stamp duty and reg­is­tra­tion charges in the cost of the prop­erty and your profit will be re­duced ac­cord­ingly.

You can­not add EMI paid to the cost and claim it against the profit. How­ever, whether the in­ter­est paid on such a loan can or can­not be claimed will de­pend on the facts of the case. In case this is still an un­der-con­struc­tion prop­erty, you can cer­tainly add the in­ter­est paid on the loan to the cost of the house.

Since this is a short-term cap­i­tal gain, there are no other av­enues avail­able to you to claim any ex­emp­tion such as in­vest­ing in another res­i­den­tial house prop­erty or in­vest­ing in cap­i­tal gains bonds. I booked an un­der-con­struc­tion unit with a lead­ing builder for which I took a loan of ₹ 25 lakh.The builder has agreed to hand over pos­ses­sion by the end of 2014. Since I’m pay­ing EMIs, I would like to know if I can claim IT de­duc­tion un­der Sec­tion 24 if I do not get pos­ses­sion of the flat dur­ing this fi­nan­cial year?

— Ab­hishek Singh As far as tax de­duc­tion is con­cerned, the le­gal po­si­tion is clear - the tax de­duc­tion be­comes avail­able only from the fi­nan­cial year in which the con­struc­tion is com­pleted (in your case the fi­nan­cial year end­ing March 31, 2015).

As­sum­ing the pos­ses­sion of the flat is given in the last quar­ter of the year 2014, an ag­gre­gate of all the in­ter­est payable till March 31, 2014 will be avail­able to you as a de­duc­tion in five equal in­stall­ments be­gin­ning from the fi­nan­cial year end­ing March 31, 2015.

This de­duc­tion along with the in­ter­est payable for the fi­nan­cial year will be sub­ject to a limit of ₹ 2,00,000 if the prop­erty is self-oc­cu­pied. Any prin­ci­pal por­tion of the loan re­paid till March 31, 2014 ie, the year prior to the one in which you get the pos­ses­sion will not be el­i­gi­ble for any de­duc­tion and the tax ben­e­fit in re­spect of this is lost for­ever. In case you do not get the pos­ses­sion by March 31, 2015, then you will not be able to claim the tax ben­e­fits in re­spect of in­ter­est dur­ing the cur­rent year and ben­e­fit in re­spect of re­pay­ment of the prin­ci­pal por­tion of the home loan made by you will be lost for ever. Harsh Roongta is CEO, Apna Paisa.He can be reached at ceo@ap­na­paisa.com

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