Rahul jain (LEARNING & TEACHING) (435 Points)
07 March 2014gud mrng frnds....
mr.X wants to purchase a house, he take loan for this purpose and paying inretest.
after three year he get the possession of house,now my question is that whether he should self occupy or give it on rent for tax saving purpose that he can take the intrest benifit on pre-acquisition property...
or in the both situation the preacquition benifit will be same ie. in five equal installment.
plz suggest me....
Anjan
(Chartered Accountant)
(69 Points)
Replied 07 March 2014
Dear Rahul,
Mr x can take the pre-acqusition intrest benefit in both the cases i.e., self occupied and or give it on rent. But the maximum limit for intrest on home loan for self - occupied property is Rs1,50,000/- including pre-construction intrest.
Rahul jain
(LEARNING & TEACHING)
(435 Points)
Replied 07 March 2014
that means for tax saving purpose mr. x should show it on rent???
and as the possession will take place after three year than how we show the previous three year rental income???
Anjan
(Chartered Accountant)
(69 Points)
Replied 07 March 2014
There is tax savings in both the cases.
In case of rental, you have the rental income and intrest cost deductble from that income. Balance is taxable or excess intrest than retnal income is savings. In case of self-occupied, rental income is 0 and total intrest paid is tax savings subject to a limit of 1,50,000/- p.a.
During the construction you need not show any rental income as it is difficult to stay for anyone during the consturction phase.
Rahul jain
(LEARNING & TEACHING)
(435 Points)
Replied 07 March 2014
but if mr. x paid more interest than RS. 150000 then in SOP case he cant able to take full interst as exp.?
and as the rent receipt are not preset in rental case of preacquisition then the assessee can take full benifit of int. paid????
Anjan
(Chartered Accountant)
(69 Points)
Replied 07 March 2014
In case of SOP, x cannot claim intrest paid inexcess of Rs 1,50,000/-
In case of rental, he can claim the total intrest paid as the rental income is calculated as per the provisions of Income Tax Act.
Rahul jain
(LEARNING & TEACHING)
(435 Points)
Replied 07 March 2014
nice...
and in renatal income case can we take the rent on the basis of fair market value/muncipal market value???
CAclubindia
