Deduction of interest on housing loan.

[manoj gupta]

A person constructed ground floor of a house by taking a housing loan. This loan is still not fully paid. Now he constructs two additional floors on this house by taking a fres housing loan. Whether the interest on fresh loan is allowable as deduction from income from house property u/s 24.

[Mukesh Kumar]

In my view there is no restriction u/s 24 of the income tax (house property) regarding deduction of interest on borrowed capital used for construction of additional two floors on the existing building. You can claim the deduction for full amount of interest if the property is let out otherwise, the deduction shall be limited to 1.5 lakhs.

[Guest]

agree with Mukesh Ji

AI Summary

Deduction of housing loan interest for additional floors may be allowed where property is let out; limits apply for self-occupation. No prohibition exists on claiming interest on a fresh housing loan used to construct additional floors of an existing house; interest attributable to that loan is deductible as housing loan interest. If the property is let out, the full interest may be claimed against income from house property; if the property is self-occupied, the interest deduction is subject to the statutory ceiling applicable to self-occupied house property and limited to that prescribed limit.