Query for claiming of Housing Principal on Let Out Property

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  1. Ismail Inamdar

    Ismail Inamdar New Member

    Dear Sir,

    In our Organization an employee has the below query:


    He has TWO house properties : one is OWN house property- which is self occupied by him

    2nd Home is Let Out Property : He has declared rental income on the same


    Please provide your reply backed up with IT Rules/ Sections.

    Thanks in advance,
    Ismail Inamdar
  2. Karan Batra

    Karan Batra Well-Known Member

    Yes, tax deduction for repayment of principal amount would be allowed for both the let out as well as self occupied property
  3. Ismail Inamdar

    Ismail Inamdar New Member

    Thank you for your reply.

    Could you share notification or any supporting document?

    Thanks in advance,
    Ismail Inamdar
  4. ZED

    ZED Well-Known Member

    Fully concur with Sirs reply.

    [In respect of interest]
    24. Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely:—

    (a) a sum equal to thirty per cent of the annual value;

    (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:

    Provided that in respect of property referred to in sub-section (2) of section 23, the amount of deduction shall not exceed thirty thousand rupees :

    Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed within *[three] years from the end of the financial year in which capital was borrowed, the amount of deduction under this clause shall not exceed two lakh rupees.

    * Five, if the loan is sanctioned on or after 1.4.16

    Explanation.—Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years:

    Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.

    Explanation.—For the purposes of this proviso, the expression "new loan" means the whole or any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose of repayment of such capital.

    [In respect of principal]
    80C(1) allows the deductions for the items covered under 80C(2)

    80C(2)(xviii) for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head "Income from house property" (or which would, if it had not been used for the assessee's own residence, have been chargeable to tax under that head), where such payments are made towards or by way of—

    (a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

    (b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or

    (c) repayment of the amount borrowed by the assessee from—

    (1) the Central Government or any State Government, or

    (2) any bank, including a co-operative bank, or

    (3) the Life Insurance Corporation, or

    (4) the National Housing Bank, or

    (5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub-section (1) of section 36, or

    (6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

    (7) the assessee's employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

    (8) the assessee's employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society; or

    (d) stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee,

    but shall not include any payment towards or by way of—

    (A) the admission fee, cost of share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or

    (B) the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out; or

    (C) any expenditure in respect of which deduction is allowable under the provisions of section 24;
  5. Ismail Inamdar

    Ismail Inamdar New Member

    Thank you for your explanation but my doubt is below:

  6. ZED

    ZED Well-Known Member

    Yes, we can.
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