Tax implication on house property

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Kailash K Rathi

Director

21 Points Posted on 07 November 2014

Case Situation

- A Salaried Individual

- Drawing HRA

- Have one House Property which is self occiupied and taken one Home Loan on same

- Wants to acquire another property by taking further Home Loan

Various Situations

1) If he acquires property under construction at the same place where he resides.

2) If he acquires property fully constructed at the same place where he resides.

3) If he acquires property under construction at some different city where he does not reside.

4) If he acquires property fully constructed at some different city where he does not reside.

Queries

a) What are the tax implications on all the above four situations.

b) What deductions will be available in all situations under various sections.

Please provide answer to above queries.

Regards,

Kailash Rathi

Replies (2)

Mihir

Wealth Manager

5358 Points Posted on 07 November 2014

Purchasing an under-constructed property will not allow him to claim interest u/s 24 till he obtains the possession.

Purchasing fully constructed ready-to-move-in property will allow him to claim interest u/s 24 maximum Rs. 150,000/- pa, and if the property is rented out, then actual interest paid shall be available as deduction u/s 24.

It really does not matter whether the property is in the same city or some other city since he is already having a self-occupied property, so HRA will be taxable in his hands.

So, in my opinion, purchasing a ready-to-move-in property on loan is a better option because if he decides to put the flat on rent, he may find someone since he is in the same city, and also can manage the property.

Wait for more replies.

Guest

Posted on 07 November 2014

Rignt now I assume that he is availing deduction u/s 24 and 80C for interest and principal repayment of Hsg loan but not HRA deduction.

1)same place, under construction: He will not be able to claim Interest/ principal deduction till the house is completed.( cannot claim HRA deduction as he is not staying in rented premises)

2)same place, constructed: He will be able to claim Interest/ principal deduction but he will have to show notional rent.( cannot claim HRA deduction as he is not staying in rented premises)

3)different place, under construction: same like 1)

4) different place, constructed: same like 2)