Dear Sai, for the flats that are under construction, the interest deductin on home loan can't be taken till the flat holder gets the possession of the flats. However the assessee can claim the pre-construction in five equal installments from the year in whihc he gets possession & also the deductio on account of iterest paid after he gets the possession. for example if the flats of your client are being completed in the month Jul12, then the interest paid till mar12, would be eligible for deducion as pre-construction interest in five equal installments from F.Y. 2012-13 & onwards. Also the interest paid from Apr12-Mar13 would also be eligible for deduction.
Now as the client is constructing two flats, he can show one of the flats of his choice as self-occupied & the other flat as deemed to be let out property. the property on whihc the interest component is higher can be shown as DLO property as there is no limitation on the amount of deductino on account of interest u/s 24(b). however on teh SOP property the interest deduction would be restricted only to Rs 1.50lacs including pre-constcruction interest..
The property whihc would be shown as deemed to be let out, your client would be requried to show nominal amount as rent received, as per the fiar value that would be receivable had the property would had been actualy let out. however from the rnet received he would be eligible to claim the deduciton on account of municipal tax paid &on the balance a Std Deductin @ 30% and also interest deduction actually accrued/paid during the F.Y. would be deductible.
Yes your client can claim HRA exemption provided that he is actually paying rent.
CAclubindia
