Exemption u/s. 24b

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This query is : Resolved

SUBHASH JAIN (Querist)

30 April 2015 Dear sir,

How much interest is exempted if house property is let out property. what is the limit of exemption for that.

Thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

30 April 2015 In case of let out property interest payable during the previous year is exempt.
.
Also you can claim 1/5 th of the Pre-construction interest.
.
No limit.
.

SUBHASH JAIN

SUBHASH JAIN (Querist)

30 April 2015 Thanks for your reply

Kindly define the mean of 1/5th of the Pre -construction interest.

Arpit Shah

Arpit Shah (Expert)

30 April 2015 https://taxguru.in/income-tax/faq-on-housing-loan-and-income-tax-benefit.html

CA Deepesh Ruhela

CA Deepesh Ruhela (Expert)

30 April 2015 Pre-construction interest is a Interest payable on borrowed money prior to acquisition or construction of house property, Aggregated Interest on borrowed capital is also allowable as deduction in five equal annual installments starting from the year in which acquisition or construction is completed as a pre-construction period Interest. Pre-construction Interest deduction is not allowable for renewal, repair or reconstruction of house property.

SUBHASH JAIN

SUBHASH JAIN (Querist)

30 April 2015 Thanks Deepesh Ji ,

It would be better if you may explain with a illustration .

Thanks

CA Deepesh Ruhela

CA Deepesh Ruhela (Expert)

30 April 2015 Person took home loan on April, 2011 for Rs.15, 00,000 for construction of house property carried Interest @ 10% p.a. , Construction completed on April,2013 and person has paid Rs.3, 00,000 as interest during financial year 2011-2012 and 2012-2013.

Loan taken on April 2011

Construction completed on April 2013

Pre- construction period From April 2011 to April 2013

Pre- construction period interest Rs.3, 00,000

Interest Deduction Rs.50, 000 from financial year 2013-14 (AY 2014-15) onwards in 5 equal Annual installments (3lac/5)

SUBHASH JAIN

SUBHASH JAIN (Querist)

30 April 2015 Thanks Deepesh Ji,

If I taken a Loan of Rs. 15,00,000/- in the f.y. 2011-12 ( out of the Rs. 15,00,000/- I purchase a land for Rs. 7,50,000/- and balance retained for construction ) and construction completed in the f.y. 2013-14 with balance amount , in that case what will be the tax treatment.

Please clarify. ( I think I am missing some point )

CA Deepesh Ruhela

CA Deepesh Ruhela (Expert)

30 April 2015 Sir, Total Pre-construction period interest amount of Rs.3 lac.

for FY 203-14:

1st installment of Pre-construction period is Rs.60,0000/- plus Interest for FY 2013-14 say Rs.20,000/-

Total deduction available in AY 2014-15 (FY 2013-14)= Rs.80,000/-.

I hope your query resolves now. If, is there any query then message me.

SUBHASH JAIN

SUBHASH JAIN (Querist)

30 April 2015 Thanks Deepesh Ji ,

In that case , exemption will be allowed only after completion of construction of the house, it will not allowed at the time of land acquiring along with during the period of construction.
am I right or wrong.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

30 April 2015 Yes , you are right.
.

SUBHASH JAIN

SUBHASH JAIN (Querist)

01 May 2015 Dear sir,

One more query in this regard , that if interest on home loan prior to acquisition or construction completed has been paid on borrowed capital , in that case it will be allow 1/5 part or condition of exemption satisfied only payable system. ( Interest should be payable only )

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

02 May 2015 1/5th of the total pre-construction interest, whether paid or payable, is allowable as deduction in the year of completion and in 4 subsequent AYs.

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