To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A appears every other Monday.
I want to take a home loan to buy a house. I am buying it from a person who also had taken a home loan some years back. Since a loan is outstanding against that property with the same lender, will I get a loan? How will the payment be made to my seller?
Even if the seller has already mortgaged the house, which you plan to buy, it should not affect you in anyway. You will get a home loan for this property as per your eligibility, which will be essentially based on your repaying capacity.
Once the loan is approved, your lender will set off part of the amount against the outstanding loan of the seller for that property, while the remaining would be disbursed in the seller’s name.
I had taken a housing loan of Rs20 lakh from a private bank. The house was supposed to be handed over to me by April 2009, but due to some unavoidable circumstances, it has now been delayed. Now, I am likely to get the possession by March 2010. The bank has started deducting pre-EMI. Please let me know whether I am entitled to any tax benefit for the financial year 2009-2010 for the interest paid? If not, what is the position?
One can claim tax benefits only after having taken the possession. Once the construction gets over and you take possession of the house, you can claim tax benefit for the interest paid during the pre-possession stage. As per the Income-tax Act, 1961, one is allowed to claim tax rebate of 20% of the interest paid during the pre-possession stage in the year you take possession and the balance 80% can be claimed over the next four years to the extent of 20% each year, subject to an overall cap of Rs1.5 lakh per year under section 24 in the case of a self-occupied property.
However, as stated earlier, you can start claiming the benefit on interest paid during the pre-possession stage only after taking the possession of the property and the following four years. It is advisable to consult your tax expert.
Renu Sud Karnad is joint managing director, HDFC.
Readers may write in with their queries and comments to firstname.lastname@example.org