To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A appears every other Monday.
I am a Union government employee. I own a house in Hyderabad and get tax benefits on the equated monthly instalments, or EMI (principal and interest), on the loan taken for it. I would like to settle down in my hometown, Faridabad, after retirement, so I want to buy a flat there. I am planning to have my parents stay in this new flat, or it could be left unoccupied till I move to Faridabad. Please advise me on whether I would get a tax benefit on the loan taken—if I continue with my job in Hyderabad—and a) if my parents stay in the flat; b) if it is left unoccupied.
Irrespective of whether you have your parents staying in your new house at Faridabad or it is left unoccupied, the house will be treated as self-occupied and you’ll be entitled to all the tax benefits applicable on the same.
However, if you rent out the property to your parents, then you can claim all the tax benefits for a rented property and also claim tax benefits on your Hyderabad home as a self-occupied property.
Please note that in case you are not deriving any rental income from your parents, the tax benefits would be limited to one house (self-occupied property) of your choice, and the maximum tax benefit of Rs1 lakh per annum under section 80C of the Income-tax (I-T) Act on the principal amount repaid and up to Rs1.5 lakh per annum under section 24(b) on the interest payment will apply.
For a property rented out, you can set off the entire interest payment in excess of net rental income (rent income less standard deduction and municipal taxes) received on the rented houses against your income. You are advised to approach an I-T consultant for further guidance to optimize your tax benefits.
I have an approved loan from HDFC for a property under construction property for which I have been taking disbursements in stages and paying pre-EMI. Till now, I have taken disbursement of almost 75% of the approved amount. Now I want to stop further disbursements as I can manage the rest from my own funds. The property is ready for possession. I want to start my original EMI at the earliest. Can I do that?
Yes, you could make a request for lowering your loan amount and starting your EMI, provided you submit the receipts for the balance payment to HDFC.
I have some land around my house in West Bengal, and would like to build additional rooms and a staircase on this plot. I am yet to get the plan approved by the city corporation. Can I get a home loan for this?
You could get a loan for the additional construction on the plot once you get the requisite approvals from the local authorities. The normal home loan terms will apply.
Renu Sud Karnad is joint managing director, HDFC.
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