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HT Estates - - HTESTATES - Harsh Roongta

I have one prop­erty in Dwarka (for which I took a loan of ₹ 28 lakh) and another that I re­cently pur­chased in Ghazi­abad (for ₹ 17 lakh). I have given the first prop­erty on rent (₹8,000 per month) and am tak­ing pos­ses­sion of the sec­ond house by end of this month. As of now I work and live in Gur­gaon (on rent). I wanted to know how best I can avail of in­come tax ex­emp­tions.

— Varun Sharma Since the first prop­erty is rented, the full in­ter­est in re­spect of loan can be claimed against the rental in­come un­der Sec­tion 24(b); How­ever, the rent you re­ceive will be treated as in­come from house prop­erty and is tax­able

The tax­able in­come of the let-out prop­erty will be ar­rived at by de­duct­ing full in­ter­est in re­spect of such prop­erty from the rent re­ceived by you in ad­di­tion to 30% of the rent as stan­dard de­duc­tion in re­spect of re­pairs, etc.

A bor­rower can get tax de­duc­tion ben­e­fit on a home loan for an un­der-con­struc­tion prop­erty only from the fi­nan­cial year in which the con­struc­tion of the house is com­pleted ir­re­spec­tive of whether it is pre EMI or EMI on part pay­ment. The in­ter­est paid dur­ing the pe­riod prior to the year of com­ple­tion of con­struc­tion will be per­mis­si­ble in five equal in­stall­ments be­gin­ning from the year in which the con­struc­tion is com­pleted and pos­ses­sion taken. Any re­pay­ment of prin­ci­pal dur­ing the years when the prop­erty re­mains un­der­con­struc­tion is lost for­ever.

So, in re­spect of the Ghazi­abad prop­erty, as­sum­ing it will be de­liv­ered this month, you will be en­ti­tiled to claim de­duc­tion of the in­ter­est payable for the year ended on March 2015 on the loan taken to pur­chase the prop­erty. If you re­side in that prop­erty the de­duc­tion will be up to a limit of ₹ 2 lakh only. You can also claim in­come tax ben­e­fit to­wards re­pay­ment of hous­ing loan on both prop­er­ties put to­gether but this has to be within the over­all limit of ₹ 150, 000 un­der Sec­tion 80 in ag­gre­gate with other items of in­vest­ments like life in­surance pre­mium, con­tri­bu­tion to prov­i­dent funds, etc.

None of th­ese claims are af­fected in any man­ner by any claim for HRA ex­emp­tion in re­spect of rent paid for Gur­gaon flats. I want to buy a flat from a pri­vate de­vel­oper. I had ap­proached a bank to fund me. How­ever, since the prop­erty is not in an ap­proved area I will not be granted a loan. Is there any pos­si­bil­ity of get­ting a loan from some other source?

—Rakesh Sri­vas­tava If the pro­posed con­struc­tion falls un­der the list of neg­a­tive ar­eas of the bank, the chances of get­ting fi­nance for the pur­chase of the prop­erty seems bleak. You can try ap­ply­ing to the lo­cal co­op­er­a­tive banks that may be will­ing to lend you based on their lo­cal knowl­edge and your re­la­tion­ship with them, though the rate of in­ter­est will be on the higher side.

Both the risk as­so­ci­ated with the choice of prop­erty (even where the project is pre-ap­proved by the bank) and the cost of any de­lay in the project is all yours. The rep­u­ta­tion of the builder as re­gards de­liv­ery on promised dates or oth­er­wise is an im­por­tant fac­tor to be con­sid­ered while go­ing for an un­der-con­struc­tion prop­erty.

It will be in your own in­ter­est to do nec­es­sary due dili­gence be­fore fi­nal­is­ing the pur­chase. You should never buy in an un­der-con­struc­tion project un­less it has been preap­proved by at least a cou­ple of large lenders.

It is al­ways bet­ter to buy ready-to-move flats even though they are more ex­pen­sive be­cause that avoids all con­struc­tion de­lay risks as well as saves on ser­vice tax and VAT that is payable only on un­der-con­struc­tion flats. Harsh Roongta is di­rec­tor, Apna Paisa. He can be reached at ceo@ap­na­paisa.com

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