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Loss of interest on house property loan

SANDEEP KUMAR SACHAN (Salaried Employee) (28 Points)

07 August 2015

I have taken a loan in Feb 2010. The builder has given completion time in Sep 2012. He has given possession on Apr 201e. my pre contruction interest ammount till 31 Mar 2014 is Rs773946/-. The interest for current FY is Rs.192234/-. The maximum limit of interest is Rs 200000/- for the FY 2014-15. My Pre contruction interest 1/5 is Rs 154790/-and Post Construction int of CY is Rs192234/-. The total interest is Rs 347023/-. I can claim maximum Rs. 150000 only. Then I am the loser now, if contruction is completed on time then I can claim all tha interest part. Is there any case law for claiming full interest as loss of house property?

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11 Replies

CA. Roopali Kadam (Jobs on assignment basis.) (1453 Points)
Replied 07 August 2015

So when did construction got completed

Rajagopalakrishnan R (PARTNER) (1422 Points)
Replied 07 August 2015

The first year in which you can claim interest is FY 2014-15. Assuming possession in April 2014 . ( There is a spelling error in your query) You have caluculated pre construction interest till March 2014. Yes you will lose the interest claim over and above 2 lakhs. Since you have not done anything to enforce the delivery date of Sep 2012, you cannot possibly do anything about it at this stage. Except sue the buidler for damages, which is a very long shot!! and too late!!

CMA Poornima Madhava (CMA) (13097 Points)
Replied 07 August 2015

U can claim interest deduction without any limit if the property is let out (not if self occupied)

CA Rajendra Naik (Practicing Chartered Accountant) (53 Points)
Replied 07 August 2015

agreed with Poornima mam...

Ashok J (CA Final) (880 Points)
Replied 18 August 2015

If property is let out u can claim full int deduction.....if it is self occupied deduction is 2 lacs only...u will lose some amt of tax benefit...

Samuel (manager) (40 Points)
Replied 18 August 2015

Another scenario..

Join property in hustand, wife name. Principal and interest paid by husband, so I understand husband gets house loss deduction.

Howere, ITR-2 ask is if property is in join name, when i says yes it asks percentage, and I put 50% each. When I put 50% in husband name, the annual value reduces to half as well and the loss increases compared to the case where ownership was put in as 100%

Case 1: Now, I am in dilemma, if I put 100% ownership, it's facutally incorrect since house and loan are in joint name. House loss will be = 2 lakh( rent) - 5 lakh ( interest) = 3 lakhs

Case 2: If I put 50%, since annual value decreas to half, the loss widens.House loss = 1 Lakh (rent) - 5 lakh( interest) = 4 lakhs. (Omitting 30% maintenance for simplicity) Can I claim higher loss like case 2 above ?

thanks, Sam

Ashok J (CA Final) (880 Points)
Replied 18 August 2015

A house property can be registered in joint name even though if it is fully owned by either husb or wife...one shud be able to prove tat loan is repaid only from one person income....husb in ur case...he can claim full dedn...wife shud not

1 Like

Samuel (manager) (40 Points)
Replied 19 August 2015

Originally posted by : Ashok J
	A house property can be registered in joint name even though if it is fully owned by either husb or wife...one shud be able to prove tat loan is repaid only from one person income....husb in ur case...he can claim full dedn...wife shud not

Thanks but the question was little different. (For clarity husband is only claiming and wife is not claiming, this part is clear)

My question is, out of the 2 cases above in both cases husband is claiming, which case is correct to apply in ITR

-Sam

Rajagopalakrishnan R (PARTNER) (1422 Points)
Replied 19 August 2015

If husband only is claiming then both income and interest should be shown 100 % in Husband. or both 50%. Not advisable to claim that rent is shared with joint owner, but interest paid will be claimed in full !!. But very technically speaking if the borrowing is joint and ownership is joint then husband CAN claim only his share (50%?). I am saying this to differentiate between cases where wife is also tagged in a co borrower/co obligant by banks for security and continity purposes

1 Like

Samuel (manager) (40 Points)
Replied 19 August 2015

Originally posted by : Rajagopalakrishnan R
	If husband only is claiming then both income and interest should be shown 100 % in Husband. or both 50%. Not advisable to claim that rent is shared with joint owner, but interest paid will be claimed in full !!. But very technically speaking if the borrowing is joint and ownership is joint then husband CAN claim only his share (50%?). I am saying this to differentiate between cases where wife is also tagged in a co borrower/co obligant by banks for security and continity purposes

Yeah. so technically you are suggesting option 2

,since option 1 (100% ownership, 100% loan payment) is factually incorrect

I am still not convinced which option should I pursue while filing ITR, thats the whole dilemma

Ashok J (CA Final) (880 Points)
Replied 19 August 2015

Who is d actual and absolute owner of d bldg??? If it is husb full rent and dedn is available for husb....if wife is legally a joint owner then half rent taxable in both hands. Further if wife is legally joint owner and husb repays full loan he can claim only 50% dedn...wife cant claim anything