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Carry forward of Loss on House Property after Sale of House

Ayushraj (Professional) (125 Points)

30 March 2010

Hi Everbody!

An Assesssee sold the concerned Flat. (pre-paid and closed the Loan a/c). (Flat was Rented) He has other 2 properties which are also rented.

He has accumulated loss under House property (for the Flat) Rs. 5,50,000/- (approx) which can be carried forward for 8 years (and adjusted only against Incomes from House property). Also he has to claim 1/5 of interest u/s 24(b) (for pre-construction period) for 3 more years (for the said Flat).

Can he carry forward the said accumulated loss even after the property is sold?

Can he claim the 1/5th Interest u/s 24(b) for another 3 years even after the property is sold?

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17 Replies

Pradeep Sharma (student) (114 Points)
Replied 30 March 2010

hiiiiiii Ayushraj

you can carry forward the said Accumalted loss for the reaming yrs.

but i have the doubt in the claim of the pre-construction intrest

lets see waht other said on this question

Ayushraj (Professional) (125 Points)
Replied 31 March 2010

Can the Assessee claim 1/5th Interest u/s 24(b) for another 3 years even after the property is sold?

SHUVRO ( (WANT TO LEARN) ) (175 Points)
Replied 31 March 2010

the act does not restrict the claim if the house is sold before.logically pre construction period interest is a part of the INTEREST element of the loan.Once the post construction interest is not disallowed hence the pre construction period interest must also not be disallowed.

Amir (Learner) (4016 Points)
Replied 01 April 2010

Dear Ayushraj,

Loss under head House Property can be carried forward after the sale of House or Not - YES, because No such conndition is prescribed to carry forward Loss (Its like the same way as PGBP loss can be carried forward after the discontinuance of Business)

As far as Deduction on account of remaining instalments of preconstruction period is concerned - NO, it will not be allowed simply because - Deduction u/s 24 is allowed in computing the Income from a property (individually for each property) - and once it is sold there is no property in respct of which Income can be computed.

1 Like

C.Balaji (Learner) (1867 Points)
Replied 01 April 2010

Dear Ayushraj...........

First of all thanks for asking a good query.........

Loss under HP can be carried forward even after the sale of HP........i think there is no restriction........

Preconstruction deduction - i will go with Amir brother......since there is no property exists no ded. will be allowed...

C.Balaji (Learner) (1867 Points)
Replied 01 April 2010

Dear Amir brother......

I have a query.....

Incase A has two houses X and Y....sold X - 2 inst. pre const. int. remaining.....Is A allowed ded of pre const int of X in Y..........????

Amir (Learner) (4016 Points)
Replied 01 April 2010

Hi Brother,

Just in anticipation of this doubt I tried from my side to make it clear already by mentioning "a property (individually for each property)

Anywaz - No it will not be allowed..

Income has to be first computed in respect of each property individually.

Bhai, Pls appreciate the difference between "Deduction (of an Expense)" and "Loss"

Deduction - An expense which is allowed only out of that Income for which it is spent.

Loss - It is the excess of Deduction over Income.

In simple terms it can be said that "Losses can be setoff but Deduction cannot"

1 Like

SHUVRO ( (WANT TO LEARN) ) (175 Points)
Replied 01 April 2010

amir sir

tussi gr8 ho

sir plz clear my doubt.U said right ly that preconstruction period interest is a sort of deduction.Under any circumstances can a amount of deduction exceed the total income from that particular source? If yes, then in which concept?Like it is not applicable to 80C, 80D etc.

If no , then how is the preconstruction period interest deducted from NIL income from a self occcupied house?

I think u got me?

Amir (Learner) (4016 Points)
Replied 01 April 2010

Dear Survo,

Deduction can exceed Income, Only then we arrive at Loss.

So where deduction is being claimed in course of computing Income then it can exceed the amount of Income.

But once Income is computed and now u r in the process to compute Taxable Income then it cannot exceed the amount of Income.

1 Like

SHUVRO ( (WANT TO LEARN) ) (175 Points)
Replied 01 April 2010

Respected amir sir

Plz have a look at this link from wiki. https://en.wikipedia.org/wiki/Tax_deductions It says that : They are variable amounts that you can subtract, or deduct, from your gross income.^[1^{That means first the income is to be computed thn the deduction is to be given to effect.This is not the case with House Property, where the deduction u/s 24 is deducted from GAV instead of the income frm HP.Please do clarify, is there any other definition of the word TAX DEDUCTION?}