I have an HDFC home loan.The possession is still awaited. now i want to close this loan a/c as the possession date is still 2 years away I plan to take another loan for ready to move in house(second house) so that the interest exemption from taxable income could be availed. My queries are:
Q.1. I was told by the HDFC executive that if i close the loan a/c, then i will not be able to claim the pre-possession interest exemption over 5 years @ 20% per year subject to max limit of 1.5lakhs. Is this true? If yes should i make a substantial prepayment and drastically reduce my emi so that i can still service the second home loan i plan to take in near future?
Q.2. How much of the interest for the second housing loan would be exempt from the taxable income. I was told there is no limit. Is this true?
Q.3. If answer to Q.2 is yes, then can i avail tax exemption on both the loans simultaneously?( 1.5 lakhs for 1st loan and no limit for second loan)
Q.4 Refer http://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=ITAC&schT=&csId=75b4aeaf-f25e-41bd-a339-aa1788291347&rdb=sec&yr=a56ea192-3ca8-433a-a515-ed68a062eac7&sec=24&sch=&title=Taxmann%20-%20Direct%20Tax%20Laws
The loan for first house was under down-payment plan and was disbursed completely in Dec 2009 and EMI started.The possession of the said property is sadly still awaited. Can the interest component of EMI be claimed as exemption ( 20% for 5 years) as it is more than 3 years from the date of loan disbursal and still no possession? If the answer is no, what can be done about it? Any additional loan from HDFC in the same a/c will help?
I would be grateful if you could advise me in this matter.
regards,