It’s that time of the year when all of us are busy calculating tax deductions and benefits of investments. However, many of us still don’t know how to calculate taxes and avail tax benefits that our property gives us. In a bid to guide our consumers in the same regard, Magicbricks organised a Gurutalk - a live chat session with Vaibhav Sankla, director, H&R Block. The topic – was “Are you availing the tax breaks that your property gives you?” Here are common questions asked.
Sneh John has an ongoing home loan for an under-construction flat. Can she avail tax benefits on the same, if any? If not, does she need to wait till possession before claiming tax benefits
Sankla says, “In this case one has to wait until you obtain possession to be able to claim tax benefit on the housing loan interest and principal repayments. The tax benefits start only from the year in which you obtain possession of the house. In the year of possession, you would be entitled to claim deduction of interest for that entire year plus one fifth of the interest payable during all the preceding years on this loan”.
He also said it is wise to note that deduction equivalent to the one fifth of pre-construction period interest is available for each of first five years starting with the year of possession. “The total amount of interest deduction is restricted to Rs 150,000 if the property is self-occupied. Principal repayment deduction too is available from the year of possession. However, no deduction can be claimed on the principal repayments made during the pre-construction period,” he added. Another reader asked whether one could claim a tax rebate, if the person had two housing loans on two different properties? Sankla says, “Yes, a consumer is eligible to claim home loan tax benefits even if he/she has two properties. In fact, the tax rebates are nothing to do with the number of properties. One can enjoy claims on tax deductions a housing loan on any number of properties”.
Those who are looking to sell off the property, wanted to know who was entitled to pay TDS - buyer or seller? To this Sankla opined “The buyer would deduct the TDS and pay only the balance sum. If you are a resident then TDS would be one per cent. However, if you are a non-resident then the TDS would be 20 per cent (if property is long term capital asset for you) or 30 per cent (if it is short term, i.e. period of holding is up to three years) of the sale value unless you/buyer obtains a certificate from the income tax department for lower deduction of the tax.”
Source - Magicbricks News
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