To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A will appear every other Monday.
I live in a house that is held jointly in my father’s and my name and was purchased on an outright basis. I have never taken a home loan. Can I claim tax benefit for the interest and principal amount paid if I go in for a home loan for another house, which will not be a self-occupied property but rented out?
You can avail tax exemption if you rent out the new property. Tax benefit for rented property is over and above the tax benefits available for a self-occupied property. In the case of the rented house, you can set off the entire interest payment in excess of net rental income (rent received less standard deduction for repairs) received on the rented house against your total income.
In addition, you can also claim tax benefit under section 80C on repayment of the principal amount. However, it will be part of the overall 80C benefits.
We (husband and wife) took a joint loan of Rs32 lakh from a nationalized bank for a tenure of 10 years. The loan was initially disbursed for the purchase of a site. It was sanctioned/disbursed with the condition that we would construct a house within two years from the date of disbursement of the loan. Is the time frame given for construction generally three years or two years? Also, if I do not construct the house within two or three years, but repay the complete loan before this time frame, what could be the implications? We are not in a position to construct the house in the next two-three years.
Let us assume that the loan was taken for purchasing land for the construction of a residential house within a specified period of time. Because you have not been able to construct the house within the agreed time frame, I would advise you to get in touch with your loan provider and discuss the implications if any, before taking any decisions.
Renu Sud Karnad is joint managing director, HDFC. Readers may write in with their queries and comments to firstname.lastname@example.org