House property

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SALONI KOTHARI (Querist)

27 July 2013 If Loan is taken for the purchase of under construction house and the possession of same will be available after 3 years. The House is not constructed by us but by the builder who will give possession after the completion. But the repayment of loan will start from today itself only.

Then the Interest paid on such loan will be classified as Pre construction Loan period Interest or normal Interest within limit of Rs. 1,50,000?

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)

27 July 2013 Money may be borrowed prior to the acquisition or
construction of the property. In such a case, interest paid/
payable before the final completion of construction or
acquisition of the property will be aggregated and allowed for
five successive financial years starting with the year in which
the acquisition or construction is completed.
in act they used word aquisition and contruction both. so it dosent mean that who is built or building house.
By interpretating all this it will under pre contruction period interest.

SALONI KOTHARI

SALONI KOTHARI (Querist)

27 July 2013 If I takes a housing loan of Rs 25,00,000 for booking a House on 1st April, 2011 and Construction of house gets completed on 28th February, 2014, then the Interest Paid for two years i.e. F.Y. 2011-12 and 2012-13 if is Rs. 3,00,000 then in which Interest it would be classified?

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)

27 July 2013 it will fall under pre construction period interest. as i earlier said act used both words aquisition & construction in the pre contruction period interest criteria .and buying house or flat from builder is amounts as a aquisition, therefore it will fall under pre contruction/auqusition interest..

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