I want take a loan to renovate my house. Will this loan be eligible for tax benefit under section 80C?
Yes, you can get tax deduction benefit in respect of the interest payable on the loan taken for repair, renewal, reconstruction or renovation to the extent of Rs1.50 lakh under section 24 of the Income-tax Act, provided the house is self-occupied. There is no cap on the interest if the house is on rent. No deduction is available with respect to the amount of principal repayment under section 80C in respect of loan taken for repair, renewal, reconstruction or renovation of the house.
I have taken a flat in Bangalore and I stay in the same city on rent. Can I avail income-tax deduction for house rent allowance (HRA) as well the home loan interest?
Claiming tax deduction on a home loan is not linked to claiming HRA. You can claim HRA if the flat’s rent lease is in your name. If the flat purchased by you is let out, you can claim tax deduction on repayment of the principal up to Rs1 lakh under section 80C together with other qualifying amounts. There is no cap on the interest on home loan, provided the property purchased with the loan is let out.
If I sell two properties and reinvest the amount in two different new properties, will I be able to avoid capital gains tax?
Yes, you can reinvest the sale proceeds of two residential properties in two different new properties in order to save capital gains tax arising out of the sale of the first two residential properties. However, you would have to ensure that the property being sold is a long-term property on the date of sale and the new property is purchased within a period of three years from the date of sale of the original house property. In case the investment is not done before the due date of filing your income-tax returns, the amount of capital gains not used for purchasing a property should be deposited in Capital Gains Account Scheme, 1988.
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