Hi, I am currently residsing in an apartment jointly owned by me and my wife. We both claim tax deduction under 80C for Principle and Interest proportionately as per our EMI contributions. Now (May-2016) I have got possession my second flat in a different city which I had purchased in Dec, 2011. I have paid EMI on my second flat as well right from Dec 2011. I do not intend to rent out the second flat now. My question is how best can I claim tax benefit on the EMI I am paying for my second flat. And how can I claim tax deduction for the interest I have paid from 2011 on my second flat? thank you,
Dear Sir,
Whatever deduction you will claim the maximum amount of benefit shall be restricted to Rs. 2,00,000/- for interest component and Rs. 1,50,000/- for Section 80C.
Ideally you should claim for second house and your wife should claim from first house so that you both can avail full limit under both the heads.
Dear Sir,
Your second property will be deemed to be let out even if you don't rent it out actually. Further, whatever interest you are paying with respect to that house loan will be eligible for deduction under section 24(b).
Please feel free to revert in case of any queries. We can help you out in filing your ITR taking into account above loan.
Thanks and Regards
CA Abhishek Dugar
Thank you for your answer Mr. Dugar. Can I get any tax exemption for the interest I have paid before possession of the second flat.?
Further, I would disagree with my other professional colleague here. There is no limit on the interest which can be claimed with respect to your second house property (I.e. deemed let out property). You can even claim the interest for more than 2 lakhs.
Hence, it is advisable to claim interest deduction for both the house property.the limit is applicable for your self occupied house property.
Please let me know if you need any further assistance on the above.
Thanks and Regards
CA Abhishek Dugar
For second flat you need to show it under deemed letout and declare Annual rental value and claim total interest you paid as deduction.
Dear Sir,
You can select the Flat on which your EMI is on a lower side as a Self Occupied Property as it carries a maximum cap of Rs.200,000/-.
The other flat in which the interest component is higher can be shown as a Let Out Property and the total amount of Interest Paid (minus) the amount of rent received can be claimed as a deduction.
Trust this clarifies your query.
Feel free to get back/ call back in case of further details.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB - GEN, CERT. FAFP
Dear Sir,
As per the information provided by you it appears that you bought the property in 2011 and the construction is completed in 2016. So if that is the case then I am Sorry to say but you cannot claim the benefit of Pre-Construction Period Interest as it can be claimed only if the House Property is completed within 3 years, which did not happen in your case.
Trust this clarifies your query.
Feel free to get back/ call back in case of further details.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB - GEN, CERT. FAFP
Sirs, My second house is a vacant property. I want to know if I can claim the pre-construction interest in 5 equal installments under Section 24, or is it capped to only Rs.30,000/- because construction took more than 3 years. As per another website: "Please note requirement of completing the construction of house in 3 years applies only to self-occupied house. For a let-out property, there is no cap on tax- benefit for interest payment on home loan, even if the house is completed after 3 years. For the self-occupied property, the maximum tax benefit would have fallen to Rs 30,000 if the house was not completed within 3 years." Is this statement true? It contradicts what Mr. Rohit R Sharma has mentioned. thank you for the clarification. -Omkar