BackAsk Mint | Not staying in your house or renting it? You still get tax breaks
Ask Mint | Not staying in your house or renting it? You still get tax breaks
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To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A appears every other Monday.
Even if you are not staying in your house in Moradabad, because you are working in another city and are not deriving any other benefit from the house, the house will be treated as self-occupied for tax purposes.
Tax benefits are for the year and you will be entitled to all of these, namely, up to Rs1 lakh a year under section 80C and interest payment up to Rs1.5 lakh a year under section 24(b) of the Income-tax Act, 1961. In case of any interest paid (pre-equated monthly instalment or EMI) before possession, you can claim interest over the next five years, subject to certain conditions.
I suggest you consult your tax adviser.
I have taken a home loan from a bank. I want to go for another loan to renovate my house. Will I get tax benefits on the principal as well as interest amount?
A loan taken for renovation of an existing house is termed a “home improvement loan" at HDFC. For an existing home loan customer, HDFC provides a home improvement loan of up to 100% of the cost of renovation, subject to the repayment capacity of the borrower, and up to 85% of the cost of improvement for a new customer.
As per the Income-tax Act, one cannot claim exemption for the repayment of the principal component of the home improvement loan. However, you could claim tax benefit on the interest component. The amount of interest allowed ranges up to Rs1.5 lakh a year, depending on when the property was completed, subject to an overall limit under section 24(b).
Renu Sud Karnad is joint managing director, HDFC.
Readers may write in with their queries and comments to askmint@livemint.com
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