interest on loan taken for residential flat in proprietorship firm

[sachin shilamkar]

We are planning to purchase residential flat in the name of proprietorship firm as guest house for the same we are taking loan from bank.

Can we claim entire interest as business expenses in the firm's account. Proprietor is already having home loan in his personal name for the existing property which is self occupied.

Regards

Sachin

[Guest]

Since it is the Proprietorship firm owner and the business are one and the same.

If the Loan is taken in the name of the Proprietor Deduction of Interest paid on Loan can be claimed.

If the Loan is taken on Firm name under the name of Guest House, Interest cannot be claimed as deduction but the maintenance expenses may be claimed as deduction as business expenditure.

[Sarveshwar Mundra]

If running a guest house is business of the proprietorship firm, then the entire interest allowable as business expenses.

AI Summary

Interest on Loan for Guest House: Deductible if in Proprietor's Name; Fully Deductible if Guest House is Business Operation. A proprietorship firm plans to purchase a residential flat as a guest house using a bank loan. The query is whether the interest on this loan can be claimed as a business expense. One response indicates that if the loan is in the proprietor's name, the interest can be deducted. However, if the loan is in the firm's name for a guest house, the interest cannot be deducted, though maintenance expenses might be. Another response suggests that if operating a guest house is part of the business, the interest is fully deductible as a business expense.