Tax Planning for Property

[Neeloy Kumar Bakshi]

Sir/Madam, myself,my wife & HUF(consisting of myself(karta),my wife & daughter) file IT Returns.(1)Our HUF does not own a Residential property.If i purchase a property in the name of HUF with loan from a financial institution,will it be eligible for the same benefits as an individual ie under Section 80C for the principal amount & a deduction of Rs 1.5 Lakh(max) for the interest portion.Is the newly introduced section 80EE applicable to HUF?

(2)My wife has a Residential  property purchased with Bank loan taken 3.5 yrs back.She is claiming tax benefits under Section 80C & on the interest paid on the loan.Now if she wishes to go for Reconstruction of this property with Bank loan,can she claim Depreciation for Reconstruction costs & Tax benefit for the Interest portion of the loan taken for Reconstruction.

[CAGOPALJI AGRAWAL]

HUF is the creation of law and if you purchase the property, it would be joint ownership only and not HUF property.

 

She can not claim depreciation as it is claimed if the property is used for business/profession. Of course she can take the benefit of interest and principal repayment.

[Neeloy Kumar Bakshi]

Sir,

     The property in my wife's name is being used for business purpose only but no depreciation has been claimed.Now if she Reconstructs the property with say 15 lac then can she claim depreciation on the original cost of the house + 15 lac ? Please explain what applies in this case & how do we go about it? Regards.

AI Summary

HUF ownership: property titled to family members is joint ownership, with deductions tied to actual owner and use. A property bought purportedly for the HUF will be treated as joint ownership by the titled family members and not automatically as HUF property; tax deductions for principal repayment and interest on a housing loan follow the actual registered owner and the use of the property. Depreciation is allowable only where the property is used for business or profession, so reconstruction costs do not generate depreciation unless the property is put to qualifying business use, while loan interest and principal may be claimed to the extent permitted by tax law.