Construction of building by mortagaging personal property

We are planning to construct a building on a land that is on my wife's name. My only income is from 4 residential flats that i have rented.When I asked my CA for proper advise, he said that I can start a Pvt Limited Company and we need to draft a Land Development agreement between my wife and the pvt limited company that I start. And then I can go to banks for business loans with mortgaging the 4 residential flats that are my personal property. My CA explained that this way I have better chances of getting the money required and also show that Loan Interest as expenses for my company. He said that if I go for personal loan the tenure would be a max of 5 years and i cannot show the loan interest as expences and hence would not avail any tax benifit.

I felt the idea he put forward is a good one. I thought I would take advise of others as well and hence posted this here. I am sorry if my post here is irrelevant but any advise and suggestion would be very helpful to me.

Thank you,

Pradheep.

Good Advice by the CA .

But please make sure that the Pvt. Limited Company should not be a shell company.

You should do some genuine business.

Your CA should prepare a Project Report for the business Loans.

If you will have no business and try to outfox the Bankers with fake Business operational proofs, then I should tell you that the bankers know these tricks very well. Its not worth it.So you should be able to justify that the loan is for real business purposes.

Also, if you float a company, you will have to prepare Balance Sheets and other statutory reports, File various returns to the Registrar of Companies, get the Financial Reports audited as a statutory requirement. Clearly, this is a good opportunity for your CA to increase his revenues.

So, you should do the cost-benefit analysis of - Compliance cost of a Pvt. Ltd. Company with the expected Tax savings.