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 firstname.lastname@example.org