I bought an under-construction apartment in 2008 in Delhi through NRI bank home loan agreement of releasing construction based demands of the builder from time to time until possession . I started to pay PEMI (Pre EMI) from 2008 which was purely interest every month without any principal repayment . In 2012 , i downsized the home loan and bank started my home loan actual EMI (Interest + Pricipal) and the same EMI i am still paying since then . I got the possession of apartment in January , 2016 . Please clarify the below considering that i am planning to start filing my ITR in India for AY 2018-19 after a long gap of 13 yrs because i migrated to USA in 2005 for job there and had no Income in India since then and i am now US Citizen with OCI Card for India with only rental income from house property in India : (1) How the interest on home loan will be calculated for deduction in current year and for previous years to use in my ITR for AY 2018-19 ? (2) Is there any deduction for principal repayment also for my ITR which i am starting to file from this AY 2018-19 now after a gap of 13 yrs since i migrated to USA ? (3) What documents i need to collect to prepare my ITR for AY 2018-19 (Only Rental Income from house property & interest on NRE/NRO Saving Bank A/C in India ) ?
1) You can claim the deduction of current year interest and previous years interest in ITR for A.Y.2018-19. Calculate total interest from the date of borrowing till the date of completion of construction and start claim it in five installments from 17-18. Maximum deduction allowed is RS.2 lacs and you can carry forward the balance to be set off in future years.
2) Yes prrincipal deduction can be claimed up to 1.5 lacs.
3) Interest and principal certificate from the bank having PAN of the bank.
Hi,
Please find below the response to your queries:
1. The maximum deduction allowed for interest is INR 2 lacs per annum.
2. Yes you can claim principal deduction up to INR 1.5 lacs.
3. You can ask the bank to give you the amortisation schedule from where you can compute Interest and principal paid during the year and in the years before. You can use the bank statements to find the interest income for the year.
Hope that clarifies.
Regards,
Nikhil.
Hi
1. You will be allowed for the Interest deduction for two things a) Interest paid during the year under consideration. b) 1/5th of the pre Construction period interest.
2. Yes, you can claim deduction u/s 80C for principal repayment
3. Your pan card, aadhar card, bank account statements, details of rental income, pan and address of tenant, interest paid certificate etc.
Hi
1. You will be allowed for the Interest deduction for two things a) Interest paid during the year under consideration. b) 1/5th of the pre Construction period interest.
2. Yes, you can claim deduction u/s 80C for principal repayment
3. Your pan card, aadhar card, bank account statements, details of rental income, pan and address of tenant, interest paid certificate etc.
Please feel free to call/ revert in case you need more clarity
Thanks and regards
Abhishek Dugar
CA CS B.Com
(1) Is there any deduction for depreciation on rental house property ? (2) Is the interest deductible from rental income of house if loan taken against the house but used for some other purpose ? Is any proof needed what the loan was used for ? (3) Is there any time period restriction that loan taken on home should be used on home related expenses to qualify for interest deduction from rental income ?
1) No depreciation allowed from rental income.
2) Only interest on housing loan is allowed against rental income. You need to get a certificate from the banker who provided you housing loan otherwise not allowed.
3) There is no restriction of time period but the end use of the loan should be for purchase, construction or repair of house property.
1.No deduction for depreciation available
2.interest is deductible only for home loan.
3.No such restriction.
Hi
Please find below the response to your queries:
1. No
2. No. The loan has to be used for the house purposes.
3. There ia no such specific requirement. However the end use of the loan has to be the purpose for which it was taken.
Regards,
Nikhil.
1. No
2. No. Generally bank directly give the loan to builder and not the applicant. Generally, you need to provide interest paid certificate from the lender.
3. There is no restriction as such.
Please feel free to call/ revert in case you need more clarity
Thanks and regards
Abhishek Dugar
CA CS B.Com
Hi
1. For AY 18-19, interest deduction shall be 1/5th of the pre construction interest plus the interest for current year.
2. Yes, deduction for principal repayment is available under section 80C. The total deduction under 80C is capped at 150000.
3. PAN, rental receipts, interest paid certificate from bank.
1. No.
2. As long as it's a home loan, deduction shall be provided.
3. No.
1) As you are not having any taxable income, there was no need to file IT Return in the earlier years. There is also no need to file IT Return u/s 139(3) of the Income Tax Act to claim carry forward of loss under the Head Income from House Property.. Hence, you can file a return now for the FY 2017-18 before 31st July 2018 claiming the carry forward of loss for the earlier years also under the Head " Income from House Property".
The interest on your housing loan upto the date of occupation in 2016 should be capitalised and allowed in 5 equal annual installments.
If you have significant taxable income in the FY 2017-18, it is worthwhile taking efforts to compute your total income for the years from 2016 and onwards and claim carry forward of losses for the set off against the income earned during the FY 2017-18.
2) You can claim deduction in respect of repayment of principal amount u/s 80C upto the extent of Rs 1.5 lakhs along with other eligible investments/expenses during the FY 2017-18.
3) You need to link your aadhar, if you have any, with your PAN for the filing of your IT Return. You need to check for any entries in 26AS, i.e., the statement of TDS to claim TDS if any and offer such income also in your IT Return. As you are a non-resident, your income earned outside India is not taxable, but it is advisable to review the incomes earned outside India to confirm that they are not taxable in India. Pl also check the entries in your Bank pass books to confirm that you are offering income properly.
Your other queries in the follow up question:
1) There is no deduction for depreciation on rental income. However, a standard deduction of 30% is allowed on the rental income net of municipal taxes paid, if any. This is allowed even if you have not incurred any expenditure on your let out house property.
2) Interest on loan against the house is sufficient.
3) The end use of the loan is not required to be shown if its a mortgage loan. However, in the case of housing loan, the loan is given for the purpose of acquisition of the house property or improvement. Hence, the end use is automatically ensured.
