A friend of mine is interested to enter into following transaction:
He owns a house in his name and is getting rent for a portion of it. HL in joint name with his wife and he is claiming rebate under section 24C
He wants to invest into another property and terms offered by the builder / developer is as follows:
1) Cost of the new property inclusive of deposit / registration etc - Rs.90 Lacs
2) Down payment 20% - Rs.18 lacs
3) HL is arranged by PNB @ 10.25% - Entire loan amount of Rs.72 will be released to builder immediately.
4) EMI Will be Approx Rs.80K per month - Interest Portion Rs.60 K & Principal 20 K (approx) for 20 years
5) The builder / developer will pay the HL interest portion of Rs.60K (approx) for 3 years or till the possession of the finished apartment is given.
6) Property planned to be acquired is in plan stage and will take 3-4 years to complete.
Queries:
1) This emi interest paid - can benefit be taken under income tax act ?
2) The amount paid by builder - will it be treated as other income ?
3) If this booking is sold after three years without taking possession of flat, can capital gains tax benefit be taken ?
He wants to create additional income for his future and has about 12 years service left. He is working in a public sector company and wife is a state govt employee.
CAclubindia
