Housing loan interest

Tax queries 353 views 2 replies

Raj

Consultant

31 Points Joined July 2008

Hi all,

Looking for some information on my tax scenario.

I invested in an under construction property in July 2012. The construction is almost complete and I expect to get possession in February 2015(before March 31, 2015). So I believe for FY14-15, I can claim tax benefits on the bank loan interest I have been paying since 2012, even though I will start living in my flat only by May 2015(interiors etc need to be completed)

I am also claiming HRA benefits for the full year FY14-15(until March), since I am staying for rent in the same city.

In this scenario, whats the best way to claim my interest benefits? If I claim it as "loss of house property let out", can I claim the entire interest amount and just add notional rental income for March 2015 to my total income? How will this combine with the HRA claim for the full year?

Thanks in advance for your insights!

Raj

Replies (2)

Raj

Consultant

31 Points Joined July 2008

Can someone please share their knowledge on this query? Thanks!

Vishal Goel

Chartered Accountant

1693 Points Joined April 2014

Hello,
If you own more than one Self Occupied Properties (SOP), you have a choice to treat any one of the properties as SOP. The other such property (ies) which lies vacant will be treated as Deemed Let Out Property (DLOP) under the Act.
But in your case you are holding only one house. You can’t claim notional rent.

The Interest that has been paid before the completion of construction should be aggregated and the whole aggregated amount shall be allowed as tax deduction in 5 equal installments for 5 successive Financial Years starting from the year in which the construction has been completed.
In your case pre -construction Interest is taken from July 2012 to March 2014.