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Type of loan for interest deduction- commercial property construction -

Arun (Others) (30 Points)

26 April 2017

I'm a salaried professional and I'm "constructing" a commercial property to let it out for rent. I'm taking a loan for the construction. I understand that the interest component can be claimed as a deduction under section 24. Q1: Banks don't give home loan for construction of commercial property. So, I'm planning to go for a mortgage loan (ie., loan against a different property). Will a mortgage loan be fine for claiming interest deduction as it is more like a personal loan and will not have any information about the construction? Thanks, Arun

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3 Replies

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 26 April 2017

I dont know why bank is not giving you loan on commercial property it fetches more revenue to banks which you can claim deduction under 24 but if you mortgage some other property and got mortgage loan you cannot claim deduction under 24 against commercial property

PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1443 Points)
Replied 26 April 2017

I think you should take the deduction benefit u/s 24b.

Point has been mention below:-

1) You are not acting with act to avoice income tax because honestly you have taken the loan for let out house property.

2) You have to talk this matter with AO if your return is called for scrutiny u/s 143(2). Other wise nothing happen.

But the construction of house must be completed within 5years from the FY when loan was taken also you must be keep all documents.

1 Like

Aseem (CA) (49 Points)
Replied 07 October 2017

Hi Please answer my loan (Loan against property) is taken against commercial let out property on while i am getting rental. Utilization is reconstruction of residence for self occupation. How much deduction is allowed and when?