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V Nagarajan: Interest paid on home loan is eligible for deduction
February 04, 2018
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I took home loan jointly with my wife who is in India and has additional income by way of fixed deposit interest income. Is she entitled for deduction along with me and is there any limit? Please clarify. Divyabharathi, Dubai.
Generally interest paid on home loan is eligible for a deduction of upto Rs2,00,000 per annum from the income of the individual under section 24 where the property is self-occupied. Repayment of principal amount of the loan upto Rs1,50,000 is eligible for deduction under section 80C. When you avail of a joint loan, tax benefits are available to both and get divided among the co-owners.

It will be in the same proportion in which the immovable property is owned by each co-owner. Both of you are individually entitled to claim maximum tax deduction of upto Rs1,50,000 for principal repayment and Rs2,00,000 for interest payment.

I have an apartment and a shop in Delhi. I am planning to dispose of both and reinvest in a larger apartment in Gurgaon. Can I get exemption from capital gains for shop as well? Manoj Gupta, Sharjah.
Yes. You can claim exemption under section 54F on sale of shop by investing the sale proceeds in a larger apartment. The new apartment has to be purchased within one year before or two years after the date of transfer of capital asset or constructed within a period of three years after the date of transfer. It will be available only if you do not own more than one residential house property on the date of transfer.

I have let out my small land to a small vendor for over 25 years and he is now refusing to vacate the premises. He is citing his long stay as the reason and demands a place in the new building. I am pl­­anning to demolish the old building and reconstruct. What is the legal remedy available to me? R Siddharth, Dubai­.
This is normally what happens when you allow a tenant to continue for a long period. But he cannot seek any special protection just because he has stayed over 25 years in your land. You could invoke any one of the available ground under the Rent Control Act to evict the tenant. Reconstruction is a valid ground to proceed against the tenant and it is not necessary that you should offer him a place in the reconstructed area.

Notes

Budget implications

The government will create a dedicated affordable housing fund in National Housing Bank. This will further supplement initiatives such as rationalised GST of 8% for affordable housing and revised consideration of carpet area of 30 and 60 sq. meters instead of built up area of 30 and 60 sqmts announced last year. The proposal of dividend distribution tax of 10% on the equity-oriented mutual funds will be brought at par with the long-term capital gain of 10%.

This will create a conducive environment for consumers to invest in a property. The announcement of an outlay of over Rs 4,000 crore on smart cities is expected to generate more employment opportunities in the country.

Currently, while taxing income from capital gains, business profits and other sources in respect of transactions in immovable property, the consideration or circle rate value, whichever is higher, is adopted and the difference is counted as income both in the hands of the purchaser and seller. Sometimes, this variation can occur in respect of different properties in the same area because of a variety of factors including shape of the plot and location.

Real estate transactions

In order to minimise the hardship in real estate transactions, it has been proposed to provide that no adjustment shall be made in a case where the circle rate value does not exceed 5% of the consideration.

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The author is a business analyst
covering Indian property markets

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