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Interest on purchase of land

Rahul Kakaria (student) (99 Points)

07 July 2010

Ques.1 can we take deduction for interest u/s 24b on the purchase of land(not house)?

for example:

land purchased Rs. 400000

lnterest paid on purchase of land Rs.10000(f.y2009-2010)

Ques.2 can we take deduction for interest u/s 24b on the purchase of land and constrution of house on it?

for example:

interest paid on loan taken for purchase of land and construction of house property Rs.50000

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9 Replies

CA Amit Kanani (Practicing CA) (338 Points)
Replied 07 July 2010

In 1st case u can't take deduction.

In 2nd case it will allow.

CA. Abhishek K. Pandey (Manager (Advance)) (901 Points)
Replied 07 July 2010

Since the deduction u/s 24(b) states only for construction or acquisition of house property, it will noy be allowable on the purchase of land alone.

Somshekar (Rankholder) (-) (158 Points)
Replied 07 July 2010

section 24 (b) clearly states interest on loan taken for purchase, construction, repair ,renewal, reconstruction of house property.

for interest to be claimed there should be income from house propertywhich is possible in the 2nd case.

in 1 st case you can claim deduction u/s 57 if you let out land. for rent taxable under other sources

VIPUL BHANDARI (CA FINAL STUDENT) (243 Points)
Replied 07 July 2010

Hi Rahul

Sec 24(b) of Income Tax Act, clearly say that you take benifit for construction or purchase of house only.

in that regards, Que 1 can not be allow, Que 2 will be allow

varun gupta (Senior Accounts Officer) (89 Points)
Replied 07 July 2010

Agree with amit karnani

Nitin Grover (CS) (1228 Points)
Replied 08 July 2010

Originally posted by : amit kanani
	In 1st case u can't take deduction. In 2nd case it will allow.

chetan Loknathka (student) (102 Points)
Replied 08 July 2010

land purchased cant deduction u/s 24b but we can ded. 24b purchases house

G M Narasimha (CA ) (110 Points)
Replied 08 July 2010

HI,

Interest on purchase of Land can'nt be availed deduction U/S 24(b) but if any loan is taken on construction on the purchased land interest will be available only on the portion of laon which is wholly used for the constuction of the building.

finally interest paid on laon taken for purchase of land is not allowed u/s24(b).

The reason for the same is that what is interest paid is a loss under the head Income from House property.

If u paid the interest on purchase of land it is not allowable because that income from land is not chargeable to tax under the head House Property it is chargeble only under the head Income from Other sources.