INTEREST ALLOWED UNDER HOUSE PROPERTY

This query is : Resolved

DHAVAL (Querist)
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18 December 2007 ONE PERSON BORROWED A SUM OF RS.300000 ON 1/6/1998 ON INTEREST @ 12% P.A. TO CONSTRUCT HOUSE PROPERTY. AS THE HOUSE PROPERTY WAS STILL UNDER CONSTRUCTION, HE BORROWED ANOTHER SUM OF RS. 200000 ON 1/4/1999.@ 12% P.A. THE PROPERTY WAS COMPLETED ON 31/8/2002 AND "IF" IT WAS SELF-OCCUPIED W.E.F. 1/9/2002. THE FAIR RENT OF THE HOUSE IS 10000 P.M.

Q.1 ] WHAT WILL BE THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY FOR THE A.Y. 2008-09.

Q.2 ] WHAT WOULD BE INCOME IF THE AMOUNT BORROWED ON 1/4/1999 WERE RS. 1200000 INSTEAD OF RS. 200000.

Q.3 ] HOW MUCH INTEREST CAN BE DEDUCTED FROM "NAT ANNUAL VALUE" (WITH KEEP IN MIND THAT UPTO 1/4/1999 ANY PERSON CAN GET DEDUCTION OF INTEREST UPTO 30000
IN CASE OF SELF OCCUPIED PROPERTY).

THIS PROPERTY IS ONLY LET OUT [LOP].

SHAMIM HAMEED

SHAMIM HAMEED (Expert)
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27 December 2007 If the property is self occupied,
Interest deductible u/s 24(1) is calculated as follows.
300000*12/100=36000 limited to 30000
200000*12/100= 24000
Total interest = 54000
In case (2)
300000*12/100=36000 limited to 30000
1200000*12/100=144000 (limited to 150000-30000=120000).
Therefore total interest=150000
In case (3) the actual interest calculated can be taken as deduction without lomitation. i.e. 36000+24000=60000 in first case and 36000+144000=180000 in second case.
in all the cases preconstruction period interest is not available because 5 years have elapsed.