Mr. A gave ₹ 5 lacs to a builder for purchase of flat in delhi and took a loan of ₹ 10 lacs. Finance Co. gave ₹ 10 lacs directly to builder for purchase of flat on behalf of Mr. A. Thus, total cost of flat purchased by r. A is ₹ 10 lacs.
The flat contruction was completed after three years i.e. three years after giving ₹ 15 lacs. During these three years, builder paid interest to Finance Co. During the financial year 2012-13, Mr. A obtained possession of flat and paid interest of ₹ 300000/-.
Mr. A had now two flats one in delhi and 2nd in haryana.
Query is
How much deduction will be available on account of interest and in which manner.
Interest Deduction on Pre-Possession Payments: Clarification Under Income Tax Laws for Multiple Properties Mr. A purchased a flat in Delhi by paying 5 lakhs to a builder and securing a 10 lakh loan from a finance company, which paid the builder directly. The flat's construction concluded three years later, during which the builder covered the interest. Mr. A took possession in 2012-13 and paid 3 lakhs in interest. He owns another flat in Haryana. The query concerns the deduction of interest under Income Tax laws. The response advises that interest before possession is deductible in five annual installments, and one flat can be considered self-occupied, affecting tax treatment of the other. (AI Summary)
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