Tax Treatment of Interest on Mortgage Loan

This query is : Resolved

MANOJ KUMAR SINGH (Querist)
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21 May 2011 Dear All

If an individual assessee has taken a house loan and if he takes another loan by mortgaging the same house for more amount and return the whole amount of existing loan by the said amount then what will be the income tax treatment of interest and principal component of new loan which will be taken on mortaging same house property.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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21 May 2011 U/s 24 the assessee is eligible to get deduction for interest payment on new loan also vide explanation to Section 24.

For Deduction U/s 80C I think the amount returned to the First lender, may be treated as repayment and the assessee will be eligible to get deduction U/s 80C within the overall limit of Rs. 1.00 lac. However, other experts opinion is needed in this regard.