Interest on mortgage loan against the property
This query is : Resolved
25 July 2018
I have property "A" which is let out. For buying property "B", I took a loan against mortgaged and the Property "A" was mortgaged to acquire Property "B". Can I claim the interest paid on loan against property u/s 24
I am offering the rent income of Property A as let out
I am offering the rent income of Property A as let out
26 July 2018
In this case, interest cannot be deducted from the rental income of property A.
01 August 2024
In the scenario where you have taken a loan against a property (Property A) to purchase another property (Property B), here’s how you can treat the interest on that loan under Section 24 of the Income Tax Act:
### **Interest on Loan Against Mortgaged Property:**
**1. **Interest Deduction Under Section 24:**
- **Property A:** Since Property A is a let-out property, the rental income from Property A will be taxable under the head "Income from House Property". You can claim a deduction of up to ₹2 lakh per annum on the interest paid on the housing loan under Section 24(b) for the property you are using for rental income.
- **Property B:** The interest on the loan taken against Property A to purchase Property B can only be claimed under Section 24(b) if Property B is also used for the purpose of earning income.
### **Deduction Eligibility:**
- **If Property B is Let-Out or Self-Occupied:** If Property B is let out or used for self-occupation, you can claim the interest on the loan taken against Property A under Section 24(b) against the rental income of Property B or against the income from self-occupied property, respectively.
- **If Property B is Not Yet Let-Out:** If Property B is not let out or is not generating rental income, the interest on the loan taken against Property A cannot be claimed under Section 24(b) because the loan was used for the purchase of Property B, and Property B is not yet generating income.
### **General Rules for Claiming Interest:**
1. **Loan Against Property:** The interest on the loan taken against Property A (which is a let-out property) can only be claimed against the income generated by Property B if Property B is used for income generation.
2. **Self-Occupied Property:** If Property B is self-occupied, the maximum deduction allowed for the interest on the loan under Section 24(b) is ₹2 lakh per annum, provided that Property B is treated as self-occupied.
3. **Proof of Usage:** Ensure that you maintain proper documentation and proof regarding the utilization of the loan and the property usage.
### **Summary:**
- **Interest Deduction on Property B:** Can be claimed under Section 24(b) if Property B is used for income generation (let-out or self-occupied).
- **Interest on Loan Taken Against Property A:** You can claim the interest if Property B is used for earning income or is self-occupied.
Ensure to consult a tax professional for precise advice tailored to your situation and to maintain compliance with all tax regulations.
### **Interest on Loan Against Mortgaged Property:**
**1. **Interest Deduction Under Section 24:**
- **Property A:** Since Property A is a let-out property, the rental income from Property A will be taxable under the head "Income from House Property". You can claim a deduction of up to ₹2 lakh per annum on the interest paid on the housing loan under Section 24(b) for the property you are using for rental income.
- **Property B:** The interest on the loan taken against Property A to purchase Property B can only be claimed under Section 24(b) if Property B is also used for the purpose of earning income.
### **Deduction Eligibility:**
- **If Property B is Let-Out or Self-Occupied:** If Property B is let out or used for self-occupation, you can claim the interest on the loan taken against Property A under Section 24(b) against the rental income of Property B or against the income from self-occupied property, respectively.
- **If Property B is Not Yet Let-Out:** If Property B is not let out or is not generating rental income, the interest on the loan taken against Property A cannot be claimed under Section 24(b) because the loan was used for the purchase of Property B, and Property B is not yet generating income.
### **General Rules for Claiming Interest:**
1. **Loan Against Property:** The interest on the loan taken against Property A (which is a let-out property) can only be claimed against the income generated by Property B if Property B is used for income generation.
2. **Self-Occupied Property:** If Property B is self-occupied, the maximum deduction allowed for the interest on the loan under Section 24(b) is ₹2 lakh per annum, provided that Property B is treated as self-occupied.
3. **Proof of Usage:** Ensure that you maintain proper documentation and proof regarding the utilization of the loan and the property usage.
### **Summary:**
- **Interest Deduction on Property B:** Can be claimed under Section 24(b) if Property B is used for income generation (let-out or self-occupied).
- **Interest on Loan Taken Against Property A:** You can claim the interest if Property B is used for earning income or is self-occupied.
Ensure to consult a tax professional for precise advice tailored to your situation and to maintain compliance with all tax regulations.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- Applicability
- Is Aadhar PAN linking required for opening bank account?
- Where to show the RCM on Rent paid to unregistered landlord
- RCM - commercial rent paid to URP under GST
- Offsetting interest income against derivative trading losses
- Application of 115BAC
- GSTR-3B - Do I file nil when there is no sale but I've bought raw materials
- TDS NUMBER SURRENDER
- Legal heir raised refund , but refund issued to the closed account of deceased.
- Capital gain on flat sale by nri, rate is 12.5% wo indexation or 20% with indexation?
- Payable outstanding for years disallowance
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding Resignation by Auditor from Pvt. Ltd.
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
