Legal Question in Tax Law in India

home loan and tax exemption
Hi,

I am working in Bangalore.
I am planning to purchase a house(using home loan) in Tamilnadu.
Is it possible to claim tax benefit for the principal repayment and the interest ?
What are the conditions if,
1) I let it out for rent.
2) I let my parents stay in it.
3) No one stays in it.
Also, can I claim tax exemption for purchase of land only(without constructing a house)?

Thanks,
Venu

Asked on 8/28/06, 10:26 am

2 Answers from Attorneys

Jitendra Kumar Kumar Pandey & Co.

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Re: home loan and tax exemption

Tax benifit is avaiable only on interest repayment and not on principal.If you let it out for rent ,the income from rent will be clubed in your income and then also only interest repayment will be deducted from your total income.Besides this if house tax or wealth tax is applicable in you area,you will have to pay that too.If you let your parents to stay in,then also, tax benifit is available on interest repayment provided your parents are your depedents.You can not abandon a house with nobody staying in it, because in that case both your bank and IT Department will frown upn you.You can not claim tax exemption on land without constructing a house.

Answered on 8/29/06, 2:18 am

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