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house property interest deductions

Abhishek Jain (22 Points)

07 February 2018

deduction limit on interest on loan for repair of house property let out.

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2 Replies

CA Naveen Chand (Chartered Accountant) (12739 Points)
Replied 07 February 2018

NO LIMIT FOR LET OUT PROPERTY ... CLAIM DEDUCTION AS ON ACCURAL BASIS

Y GOPI REDDY (GREAT POLITICAL LEADER) (378 Points)
Replied 07 February 2018

DEDUCTIONS FROM ANNUAL VALUE

There are two deductions from annual value they are

30% of NAV and
Interest on borrowed capital

Section 24a Standard deduction

30 % of Net annual value is available except for self-occupied as annual value of it is Nil and It is allowed irrespective of expenses incurred

Section 24b Interest on borrowed capital (Accrual basis no need to pay[D1] )

Interest payable on loans borrowed for the purpose of acquisition, construction, repairs, renewal or reconstruction can be claimed as a deduction
Interest payable on fresh loan take for paying old loan is also deductible
Interest can be

Prior to the PY in which the property is acquired or completed can be claimed as a deduction over a period of five years in equal installments commencing from the year of acquisition or completion
Interest relating to the year of completion of construction can be claimed in that year fully

Where buyer enters an agreement to repay the seller in installments along with interest then interest paid can also be considered as a deduction
Interest on unpaid interest is not allowed

EXCEPTION

For self-occupied property

24a deduction is Nil
24b is limited as shown below

Loan taken for based on construction, acquisition, repair, reconstruction

Before 01.04.1999– Actual interest payable subjected to maximum of Rs 30,000

On or after 01.04.1999 – Actual interest payable subjected to maximum of Rs 2,00,000

Provided Loan is taken for only acquisition or construction and it is completed within 3 years from end of FY in which amount is borrowed and Certificate from payee regards payment of interest on loan borrowed

Exception – Ceiling not applicable to a deemed let out property