Interest on housing loan after house is sold

Tax queries 575 views 4 replies

DK

CA Business

25 Points Joined August 2014

According to S 24, interest on housing loan before possession date is allowed as deduction equally spread over the next five years.

My question is as follows:

1. If the house is sold after taking possession, can this amount still be claimed as deduction u/s 24 (within the overall limit of Rs. 1,50,000 (now Rs. 2,00,000))?

2. If it cannot be claimed as deduction, can it be added to the cost of acquisition while calculating capital gains? If yes, indexation is based on date of purchase or date of payment of interest?

Replies (4)

Tribhuvan Aditya Singh

Student as well as Self-employed

3710 Points Joined September 2007

you wont be allowed to sell your property unless the whole of outstanding is repaid.. banks keep the property papers as security till the loan is repaid.

DK

CA Business

25 Points Joined August 2014

loan outstanding is already repaid and bank has released the papers. The question is whether interest during construction period can be allowed as deduction even after the house is sold.

Mihir

Wealth Manager

5293 Points Joined December 2008

I think you cannot because you are no longer the owner of the property. Yes, you may claim it in cost of acquisition while computing capital gain.

CA Krishna Chaitanya M

Chartered Accountant

463 Points Joined October 2009

Agree with wealth sutra mihir, housing loan interest (including pre construction period interest) is allowed as deduction only from house property of which the assesse is owner (whether it is self occupied or let out).

As per basic section it is clear that annual value of property consisting of any buildings or lands apportunant there to of which the assesse is OWNER shall be chargeble to tax under the head income from house property. For self occupied property annual value taken to be nil.