Tax benefit on Land purchase loan

Q. I am buying a residential land in sector 9 in Gurgaon. I want to take home loan from a bank. Though I am not sure if I would get income tax benefit on this or not. I am getting different information from different people. Sombody is saying that if I take Land + Construction loan then I would get IT rebate. But I am not clear if I would get rebate on complete loan or only loan component which is given for construction. – Brajesh Jain.

Ans. Dear Brajesh, Plz. note in order to avail Income Tax benefit on home loan, the construction should completed within 3 years from the date of disbursal of home loan.

Now considering ur case, following options r there for u.

1. Land purchase thru Loan & construction from own money – In this case, although the loan was taken primarily to purchase land still u can avail the tax benefit on this loan if u have constructed ur house on this land within the 3Y period.

2. Lan purchase as well as construction both r from loan – In this case again u can avail tax benefit on total loan condition the construction is completed within 3Y.

Plz. note as the construction `ll take time to complete, the interest paid by u in between on land loan or land + construction loan `ll not be available for tax benefit in the same FY. But u can carry over the same & avail @ 20% each year from the FY of completion of construction.


Ashal …

One Response to Tax benefit on Land purchase loan

  1. Arun Kumar says:

    @ Brajesh Jain, July 14 Question:Hi Ashal … In this post Mr Jain has asked the query about the home loan for buying a Plot in Sec 9 in Gurgaon and then constructing on the plot.But to my knowledge, I have my relatives living in the same Gurgaon sector 9, when I inquired about the process of buying a residential land plot … they said in Gurgaon:1. The deal goes in combination of Black and White. This means if the plot cost is say 50 Lakhs … then the registry will happen on the Govt announced land rates (that amounts to some 28 Lakhs) and the rest of the amount you have to pay in Black.2. Now my Q to you is and to Mr. Jain as well … How will the home loan be processed in this case and How does the angle of Black money makes difference in these cases.Ashal if you could provide me with Mr. Jain's email id that would be helpful :)RegardsArun

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