Rebate on housing loan interest if used for purchasing plot.

Hi Rishab,

As per sec 24(b), deduction is allowed for interest on borrowed capital for acquisition or construction of property

As per sec 22 which is the charging section, property refers to Building or land appurtenant thereto. Which means, Building or Building along with Land attached with such building.

So to claim deduction u/s24(b) there should be a building or building along with land (if any) attached to such building.

Merely purchase of plot one cannot claim deduction u/s 24(b).

However, if one purchases a plot of land and constructs the building within 3 years from the date of getting the loan from the bank and interest paid on borrowed capital during such construction period can be claimed as deduction u/s 24(b) in 5 equal installments as pre construction period interest.

Both value of Building and Land = value of property.

Regards,

Ali

Hi,

Interest paid on loan taken for purchase of vacant land with the inention to sold the same as it is. Can we claimed the interest paid during the period of holding the assets (interest paid after aquisition of land) as cost of improvement and claimed the indexation benefit if sold after 36 months?

Thanx...