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Questions on tax treatment of a non owner occupied commercial property?

Gopi (Engineer) (123 Points)

19 July 2018

I have a question regarding tax deductions applicable under sections 80C and 24.

I have invested in a room in a hotel that's being constructed. I have taken a loan from HDFC
for the same. Since it's under construction, I have been paying pre EMI (interest only).
The property is expected to be completed sometime by the end of this year and I have to start
paying EMI to my bank.

My questions are:

1. Am I allowed any deduction if I do a part prepayment of my loan before my EMI starts kicking in?
2. Can I deduct interest under section 24? If so, does the 2 lacs limit apply to this property (non owner occupied)?

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4 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160342 Points)
Replied 19 July 2018

1. No

2. Yes, but only after the completion of construction.

Gopi (Engineer) (123 Points)
Replied 19 July 2018

Thank you for the response.

Regarding interest deduction, can I deduct all the interest paid during construction after
completion of construction (spread over 5 years).
Does the 30% deduction apply to this commercial property also?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160342 Points)
Replied 20 July 2018

1. Yes.

2. Only if the income can be assessed under head 'IFHP' i.e. no question of commercial or residential house property.... but in your case it is to be ascertain first whether it will be rental income or business income.