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 email@example.com