Question on tax benefits from home loan and rented accomodation

POSTED BY aaadith@gmail.com ON July 3, 2014 8:51 am ONE COMMENT

In August 2013, I had taken a home loan towards purchase of an under-construction property for which I am expected to get possession around November 2014.

The property is about 17 km away from my workplace within the same city. If I plan to have my family stay in the new construction and myself continue staying in my current rented accomodation, what would be the tax implications?

Specifically,

1. Can I continue to claim HRA for the rented accommodation under Section 10 (13A)?

2. Can I claim tax deduction towards interest paid for the loan under Section 24 B while still claiming HRA?

a) If yes, which among the following two methods is the right way of computing the deductible sum for FY 2014-15:

i. interest paid from Nov 2014 to Mar 2015 + 20% of (Interest paid from Aug 2013 to Oct 2014) , capped to Rs 1.5 Lacs

ii. interest paid from Apr 2014 to Mar 2015 + 20% of (Interest paid from Aug 2013 to Mar 2014) , capped to Rs 1.5 Lacs

b) If no, please elaborate on the kind of tax benefits I can claim under this section.

One reply on this article “Question on tax benefits from home loan and rented accomodation”

  1. sharath Mumbai says:

    you can stay in the rented house and claim HRA if you show the own house as let out property. You need to show nominal rent on your house. By this, interest would not be capped to 1.5 lacs.
    All the ( Annual interest paid + municipal tax + 30% annual rent received – Actual annual rent received) can be exempted.
    Interest amount only from the time of possession would be accounted. If you get possession in November, then interest from november only would be accounted. Pre-EMIs can be calimed in 5 years block 20% each year.
    so, its your point (i) with modification as below:
    i. interest paid from Nov 2014 to Mar 2015 + 20% of (Interest paid from Aug 2013 to Oct 2014) , no capping.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Download Our FREE Ebook!

Available only for first 100 people today

Download Our FREE Ebook!

Available only for first 100 people today