Deduction of home loan

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Alka Bhardwaj

Student -CA -Final

57 Points Posted on 16 February 2011

Friends i have a query related to deduction of interest on home loan...

If an employee purchase a home by taking loan and claiming deduction of interest on loan of Rs. 150000 but niether he resides in property nor rented it out but has given it to his parents and reside in same city in another house.he is also claiming HRA.

Weather he is entitled for deduction of intrest of Rs. 150000 or there is any issue of same city clause?if he is not entitled then what he should do for claiming the same?

What would happen if the house property is vacated?

Replies (5)

Pankaj Arora

Learner

3134 Points Posted on 16 February 2011

he can not claim deduction of interest because at the same time he is claiming for HRA. If he is another city or state and house in other city or state than he is liable for claiming interest.

Guest

In present case…

1.Employee does not own the House in which he reside

(where he claims HRA) also

2.assuming, he actually pays Rent, he can claim HRA.

[Both the conditions of Sec. 10 (13A) are fulfilled]

For claming deduction of Interest on House Property Loan, conditions are:

1.House property which he owns (acquired through loan) is used for owner’s residence

2.It can not be occupied because of the fact that due to employment etc..carried at other place he has to reside there in any house which does not belong to him.

NAV then would be NIL. (Other Place can be in the same City too).

So, in this case, employee can claim HRA as well as Interest on Housing Loan.

Same city clause wont make any difference.

Rahul Agarwal

Future CA

217 Points Posted on 16 February 2011

You can claim both as both deal with seperate sections and are computed accordingly and does not overrule each other .

Alka Bhardwaj

Student -CA -Final

57 Points Posted on 17 February 2011

Thank you for your reply...

Guest

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