Interest on housing loan claimed as expense

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This discussion explores whether interest paid on a housing loan for a property used in a business can be claimed as a business expense. Generally, if a property is used for commercial purposes, it's considered a business asset, and the loan interest is a deductible expense without the usual £2 lakh restriction for self-occupied properties. However, care must be taken to distinguish between a home loan and a business loan to avoid potential disallowance.

Anu

Anu (Querist)

24 November 2021 Assessee has multiple house properties. One property is being used by him in his business. Interest is paid on housing loan on this property. Can this be claimed in the profit and loss account of the business?

If assessee had rented a premises, rental expenses is claimable. On the same lines, can he claim the interest on housing loan?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 November 2021 How many properties are 'self occupied' by him?

Anu

Anu (Querist)

24 November 2021 One property he has occupied for residential purposes, one property he is using for his business and he has let out two properties.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 November 2021 Here he has option to declare two house properties as self occupied and claim the interest part under IFHP. But as from PGBP income the interest will not be deductible.

CA Raj Doshi

CA Raj Doshi (Expert)

25 November 2021 A residential property is used for commercial purposes. This qualifies as a business asset and depreciation has to be claimed. Loan taken for such business asset is a business liability. Interest paid on such loan is definitely a claimable expense. Showing the property as self occupied would restrict you to claim only 2lakh interest p.a. Under PGBP, there won't be any restriction.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

25 November 2021 Due to difference between home loan and business loan like working capital loan, chances of dis-allowance of interest is high.

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