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Loan against commercial property

KG (Manager) (46 Points)

15 December 2012

I am planning to take a Loan Against Property to complete the construction of a commercial building in the city of Hyderabad. The municipal approval is for a commercial building, and I am told that I can not apply for a residential home loan. If I take a Loan Against my plot on which I am doing the construction,

1. Do I get a tax deduction on the interest of the loan, once I start receiving rents from the property.

2. Can the payments be deferred till the construction gets completed?

3. Does anyone know the best banks to approach for this kind of loan

4. Would I be better off by applying for a commercial loan??

5. Do I get a tax deduction on the interest of a commercial loan??

Thanks in advance

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2 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 15 December 2012

Yes, you would get deduction of full interest paid during the financial year u/s 24 while computing the income from house property. However interest paid during the construction period will be deductible in 5 equal installments till the previous year preceeding the eyar in which you get the possession once you get the possession of the properties Your income from house property will be as follows:

Rent Received xxxxxx

Less: Municipal Tax Paid xxxx

Adjusted Annual Value xxxxxxxx

Less: Std Deduction @ 30%

Interest on Home Loan

u/s 24

Income from House Property xxxxxxxxxx

1 Like

Naina Kapoor (Financial Consultant) (277 Points)
Replied 09 July 2020

Loan against property is a loan which you avail by keeping your commercial/residential property as a collateral as, this property can be a commercial as well a residential property. The property remains mortgaged until full repayment of the loan. lap loan can be taken for funding various purposes, from business-related purposes, medical emergencies, to fund a child's education, weddings etc.

The eligibility criteria for loan against property and check the documents required for loan against property is: