Deduction for home loan repayment

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Querist : Anonymous

Querist : Anonymous (Querist)

13 December 2013 Dear Sir,

I had bought a ready to move-in property in 2008 in Kolkata thru home loan and sold it off this year (2013). But I always lived on rent in Gurgaon which is my workplace (service). Questions i have are:

i)Can I claim the entire lump sum amount of principal re-payed and interest paid in this FY as deductible? Shall I still be eligible for the benefits for LICs, HRA etc. as I was last year?

ii) Since I have sold the property at a premium (due to appreciation in the value) how do I factor in the profit/premium in my income from Income tax point of view?

Thanks & Rgds
Kushal

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 December 2013 MONTH OF 2008 IS REQUIRED.
.
IF YOU HAVE ACQUIRED THE PROPERTY ON OR AFTER APRIL 1ST 2008 THEN IT LIED IN FY 2008-09.
.
THE BENEFITS IN RESPECT OF PRINCIPAL REPAYMENT WILL BE NOT ALLOWED IF YOU SELL PROPERTY IN FY 2013-14.
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FURTHER, DEDUCTION CLAIMED EARLIER WILL ALSO BE ADDED BACK IN YOUR INCOME.
.
FROM 31.03.2009 YOU ARE REQUIRED TO RETAIN THE PROPERTY FOR 5 FYs. AFTER 1.4.2014 IF YOU SELL, SUCH BENEFITS WILL NOT BE WITHDRAWN.
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HOWEVER, IF PROPERTY HAS BEEN PURCHASED ON OR BEFORE 31.03.2008 -
YOU CAN CLAIM LUMP SUM PAID UPTO RS 100000/
WITHIN THE OVERALL LIMIT OF SECTION 80C.
INTEREST FOR THE YEAR CAN BE CLAIMED UPTO RS 150000/-
.
CAPITAL GAINS (PROFIT) CALCULATION -
------------------------------------

CAPITAL GAINS = SALES CONSIDERATION - INDEXED COST OF ACQUISITION (ICA).
.
ICA CAN BE CALCULATED AS-

ICA= COST * 939/ 582 ( IF PURCHASED AFTER 1.4.2008)
OR
ICA= COST * 939/ 5551 ( IF PURCHASED BEFORE 1.4.2008)

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Querist : Anonymous

Querist : Anonymous (Querist)

13 December 2013 Thank you for your detailed advise. This is really helpful Mr. Bafna.
My initial Agreement to sell with the builder was dated 31st Mar 2008 and took home loan in May 2008 but got possession in Oct 2008. The final registry was done in May 2008.

How will it work now?

Rgds
Kushal

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 December 2013 You have to consider FY 2008-09 as the year of pruchase.
.
You can claim interest only subject to the limit of Rs 150000/-.
.
I have already mentioned other things in my earlier reply.
.

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