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Interest on commercial property loan

Snehal s88 (Analyst) (38 Points)

04 October 2014

Hi,

Can anyone please tell me if Interest on commercial property loan can be offset against income from Salary similar to interest on house property?

In a scenario where a person is already claiming benefit on principal (section 80C) and interest on house property (section 24) on 1 property. Now if one has to purchase a second house then he can claim unlimited interest deduction on this house (under section 24) adjusting for his rental income from this property. Similary, if this person was to buy a commercial property instead of the second house then can he claim the same benefits that he would have got under the second house?

Thanks

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3 Replies

Rajagopalakrishnan R (PARTNER) (1422 Points)
Replied 05 October 2014

Yes, if the net result of computation of income from that commercial property is negative. Other than a self occupied residential property, there is no distiction between residential and comercial properties. But for the second pro[erty, whether residential or commercial no claim can be made for repayment of principal under 80 C

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Snehal s88 (Analyst) (38 Points)
Replied 05 October 2014

Thank you for your reply.

I asked this question because I was told that business loss cannot be offset against salary income. So if I am incurring loss on commercial property (i.e interest exceeds rental income) then the same can be used to reduce tax liability from salary.. In that sense this will not be treated as business income/ loss? Is that right?

Z ( ) (2965 Points)
Replied 08 December 2014

It will depend on how you are treating this income from commercial property in your income tax returns . If you are treating this income as income from business then you won't be able to off set, the reason you have told us yourself, but however if in income tax return you are claiming this interest from commercial property then it will be classified as income from house property and the loss under head income from house property can be used to off set income from any other head.

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