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Itax rebate on housing loan on rental property, hra rebate?

02 July 2015

I had purchased an under construction Flat with loan of 30 lacs in Indirapuram, Ghaziabad in Year 2011 for which I got possession in June,2015. I am staying on rent in East Delhi and claiming HRA rebate. If I rent out Indirapuram Flat, can I claim Income tax rebate on Interest part of the housing loan as well as HRA rebate? Can I also claim Income Tax rebate for the loan interest paid during 2011 till March'2015 in 5 years for the rented property? Will there be any limit on Income Tax rebate for interest on housing loan for rental property ?

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CMA Poornima Madhava (CMA) (13097 Points)
Replied 02 July 2015

Yeah, u can.. if u rent out that property, u can claim entire interest on borrowed capital as deduction. U can also claim HRA exemption u/s 10(13A). But for this, u also need to show the rental income from the let out property.

Yeah, u can also claim deduction of pre-construction period interest as follows:

Pre-construction period is the period commencing on the date of borrowing and ending on

March 31 immediately prior to the date of completion of construction/date of acquisition OR
Date of repayment of loan, whichever is earlier

Interest for pre-construction period is deductible in 5 equal installments.

If the property is let out, then no limit for deduction of interest. But if property is going to be self occupied, then the limit is Rs.2 lacs provided the construction/acquisition of house is completed within 3 yrs from the end of FY in which the loan was borrowed.

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