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Deduction of housing loan

simran (IAAS) (65 Points)

14 July 2010

hi friends ,

if a plot of land is in the name of the father and the son want to take the loan for construction of house in this land , whether the son will get deduction u/s 24 for interest paid on that loan and u/s 80c for repayment of principal amount OR whether the plot of land should be transfered in the name of the son to claim the deductions .....?

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5 Replies

Sharad Saini (Student) (286 Points)
Replied 14 July 2010

in my opinion, if son is taking loan and paying intt than he can claim deduction for it. as there is no necessity that u should be owner of land also on which the building is situated...

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Amir (Learner) (4016 Points)
Replied 14 July 2010

Dear Simran,

No need to transfer the plot of land in son's name as he still be eligible to get the benefit of loan for construction of house.

Answer is in the charging section itself - Sec 22 -

The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head “Income from house property”.

For computing income underhead house property - it is not necessary that assessee should also be the owner of Land since the "conjunction" used between the two words is "OR"

Now if you think that the same way "land" alone can also be computed under House property then I am afraid the answer would be "NO" - since the word "land" is used in a context i:e appurtenant to building.

Parth Dewangan (Job) (87 Points)
Replied 14 July 2010

Hello Collegues,

Apart from above the main question arises that how the son will prove his ownership of building?

As the registration deed of the plot is in the name of the father and bank provides finance for the construction of building to whom the ownership of the plot lies.

So the key issue is to prove the ownership of building before income tax authorities.........