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Ques. |
Dear Sir,
Please clarify my queries:
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- bought and registered an apartment in Aug 2006 and occupied in Mar 2008. I want
to sell that apartment now. In order to benefit from Long term capital gains tax,
I was asked to resell after Aug 2009. In the meantime, can I buy another property
using my existing savings and new home loan and when the resale happens after Aug
2009, I would utilize the complete gains to repay the home loan. Is this approach
correct and would it classify under lone term capital gains tax?
- As per Section 54 F, long term capital gain can be avoided if the sale relates
to a property other than one residential accommodation and reinvested in any residential
property within a period of 1 year before or 2 years after the date of transfer
(Section 54 F). Can you please clarify what is meant by "within period of 1 year
before". Does it mean reinvestment between 2nd and 3rd year? I would sincerely appreciate
your response to the aforesaid queries.
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Ans. |
Only when you sell the apartment after holding it for 3 years only then the capital
gain will be long-term capital gain. If you are now contemplating to sell the apartment
in August, 2009 then also it is possible to save your capital gains by investing
today buying a residential apartment with your existing funds. The terminology within
the period of one year before the date of sale means buying the property within
12 months prior to the date of sale. This can be illustrated by way of an example.
Supposing you plan to sell some assets on 5th February, 2009 then you could have
save capital gain. Had you purchased another residential property between the period
5th February, 2008 to 5th February, 2009. I hope the theme is clearly understood
by you. In case of any further clarification please mail your query with details
& example.
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Ques. |
I am working in Mumbai and claiming HRA deduction every year. I now have two housing
loans against my name - one for my self occupied native house (parents are staying
there) and another one for a property that has been rented. Both these properties
are not in Mumbai. Please suggest, if it is possible to claim for loss on house
property for both 'self occupied' one and 'let out one' adjusting rent income (for
both the loan)? My interest payout for self occupied one is 150000 pa and the let
out one is 157000pa. and can I still able to claim HRA deduction since I am staying
in rent in Mumbai and both of my properties is outside Mumbai in different locations?
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Ans. |
You can claim house rent deduction on making payment for the house rent amount.
Likewise in respect of property which is self-occupied you will enjoy deduction
to the tune of Rs.1,50,000 on account of interest on loan. As far as the let out
property is concerned entire interest on loan will be allowed as a deduction from
the rental income. The loss of interest for both the house properties will be allowed
as a deduction against your salary income. |
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Ques. |
Sir,
I have bought a house and taken its possession in December 2008. How will the property
tax be divided between me and the builder from whom I bought the house? I am assuming
that I will pay the property tax from Dec 2008 - Mar 2009 for this financial year.
The property tax till Dec 2008 (before possession of house) shall be paid by the
builder who sold the house. Is my assumption correct ? Any help would be greatly
appreciated.
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Ans |
Your assumption if perfectly correct you will be liable to make payment of the house
tax only after the date when possession has been taken over by you. The house tax
for the period prior to the possession date will be payable by the landlord. |
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Ques. |
Dear sir, I am taking a commercial property on rent. The landlord is asking for Rs
95 per sq ft and the total area is 1120 sq ft. It is coming to 106400. Now he is
asking to deduct TDS i.e 16%. This comes to be Rs 17000. Further, he is asking for
(106400-1700) i.e 89400 + maintenance charge of 5000. It comes to 94400 the additional
thing he is asking for is 12.36% service tax which is Rs 13151. Do I need to pay
any tax if it is true then the total cost comes to 94400+13151=107551 and the TDS
that I m deducting i.e 17000 I will have to deposit in his tax account which at
the year end will adjusted for his benefit so 107551+17000 = 124551 so the rent
after the whole calculation comes to is 124551 is that figure correct or false.
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Ans. |
Please remember that service tax is payable on commercial rent for a property exceeding
Rs.10 lakhs in a year. The question of TDS is a separate issue. In any case TDS
on the rent payable has to be done where the total yearly rent either for commercial
property or for residential property exceeds Rs.1,20,000 per annum. Please also
note that in respect of TDS on the rent while calculating TDS do not deduct tax
at source on the component of service tax. The TDS will be deducted only on the
rental income. This point has been clarified by the Government.
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Ques |
Hi Sir,
There is a lot of confusion on website regarding sharing of tax benefits on joint
home loan. Please explain thi in my case. I am a software engineer and my father
is a defence personal. We have taken a joint home of Rs 25 lakh for 20 years in
April 2009/ The total interest for financial year 2008-09 comes out to be Rs 24,8712
and principal is Rs 69644. Me and my father share in home loan on 50-50 basis. 1)
Can both of us claim tax rebate on the total interest amount individually. i.e Rs
24,8712 each or shall we claim 50% of Rs 24,8712 each? 2) Can both of us claim tax
rebate on the total principal amount individually i.e Rs 69,644 each or 50% of this
each? 3) The house has been rented out for Rs 10,000 per month. How is this income
to be adjusted between me and my father and what tax benefits are we entitled to
on this. There is a thing called negative income but there is not much available
on the Internet on this. I would appreciate if you can answer my queries and publish
this too on the website as many people would benefit from it.
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Ans. |
As you and your father are co-owners of one single property. Hence, you will be
entitled to deduction of the interest amount by claiming 50% of the total interest
amount paid by you. Thus, 50% of the total of Rs.248712 will be allowed as deduction
to you as well as to your father. In the same manner in respect of the principal
amount repayment both of you would be entitled to 50% deduction in respect of total
repayment amount. In your case total principal has been paid Rs.69644, hence, 50%
on this amount will be deducted while computing tax rebate u/s 80C. If the house
property has been let out again the rent so received will be divided between both
of you. From the rental income you will enjoy 30% standard deduction. Similarly,
from the rental income the interest paid will also be allowed to be deducted. |
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Ques. |
Dear Sir, I own a property in Ghaziabad, Vaishali. I am presently living in a rented
accommodation at Indirapuram (in Ghaziabd). The distance between the two houses
is only 3 kms. My interest on home loan taken for the owned house is approx Rs 4
lakh a year. To claim the full amount of interest i.e. Rs 4 lakh, I wish to let
out my own house. In this case please confirm whether I can take advantage of House
rent allowance income tax benefit as well as interest on housing loan deduction.
Is there any rule for having the two houses (own and rented) in the same city makes
any difference. If I shift to Noida on rent, will I get that benefit or not?
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Ans. |
If you let out your house, you will get deduction for interest on loan without upper
limit. Likewise, if your own house is let out and you make the payment towards rent
for accommodation taken on rent, still you will have no problem in claming the benefit
of house rent allowance. |
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Ques. |
Dear Sir, I have purchased a house. This house is in my name along with my brother.
My brother’s income is not taxable. Hence I want to avail the benefit of EMI paid
for house in my income tax return. Is it possible to take the full amount for myself?
Please reply.
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Ans. |
You cannot get deduction in respect of the EMI payments made by you in respect of
the portion of the property owned by your brother. Please remember that the tax
payer can enjoy the benefit of EMI only when he is the owner of the property. In
case now if you want to enjoy the benefit of tax deduction in that event you may
please buy the share of your brother or receive a gift from your brother of the
property and then continue making payment of EMI in which event you will be able
to enjoy the tax deduction. |
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Ques. |
am staying with my parents in Delhi where I am paying rent to my mother through cheque.
For this I am claiming HRA benefit. Also, I have one house in Greater Noida which
is lying vacant. I have been claiming income tax benefit towards interest paid on
the housing loan. I am going to get a society flat allotted in Delhi in December
2008 for which I took the housing loan last year. Can I claim income tax benefit
towards interest on this second house along HRA benefit? Also: 1) If I leave this
house vacant while continue to stay with my parents; 2) If I give this house on
rent while continue to stay with my parents; 3) If I can get the tax benefit towards
Interest on this second house, will I get the full benefit on interest if it is
rented-out before March 31, 2009 i.e. interest paid in FY09 + 20% of Interest paid
in FY08 – Actual Rent received for 2-3 months?
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Ans. |
You can get deduction for rent payment to your mother out of the house rent allowance
received by you. Similarly, in respect of one residential house owned by you, you
will continue to receive the tax benefit in respect of interest on loan paid by
you for the said residential house together with payment towards repayment of the
loan. Now coming to the second house property owned by you, please note that on
this second house property you will not enjoy any tax benefit at all. However, once
the second residential house property is ready then if you let it out, you enjoy
full deduction in respect of interest on loan paid by you to the bank. The entire
interest paid for the financial year will be adjusted against the rental income
received by you for 2/3 months during the month.
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Ques. |
In the case of State Bank of India Vs Usha Vaid & Anr, the National Consumer Disputes
Redressal Commission termed prepayment penalty for home loan as unfair and restrictive
trade practices. The Commission asked the bank to refund the pre-payment charges
collected from Vaid, who had shifted her loan to another bank. It upheld that Consumers'
right to avail loans at lesser rate of interest can't be curtailed by such prepayment
clauses. Please refer news item http://economictimes.indiatimes.com/Personal_Finance/Property/Cities/Pune/A_heavy_price/articleshow/2413822.cms
for more details.
Further, SBI SLP (Civil) 16345 of 2007 against the Commission order in the Supreme
Court has been dismissed vide SC order dated 19.09.2008. Please refer SC Record
of Proceedings http://courtnic.nic.in/supremecourt/temp/dc%201634507p.txt which
means SC has upheld the ruling of National Consumer Disputes Redressal Commission.
In view of the above two rulings, can you please let us know, how one should approach
the Bank for waiver of Pre-Payment Penalty. Bank is not ready to accept this ruling.
Also, if my observation is correct, request you to please make people aware of this
ruling. Your answer and effort in this regard can be a major relief for thousands
of people who want to shift their home loans from one bank to another.
Correct me if I am wrong. Kind
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Ans. |
You should approach your bank giving a copy of the orders passed by the National
Consumer Disputes Redressal Commission. I personally feel that charging pre-payment
penalty is unfair in case even after producing copy of the court judgments cited
by you. If the bank does not agree with your request in that event the only option
available with you is to proceed to the consumer court for redressal of the grievances |
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Ques. |
"A Housing Society which is formed under Maharashtra Coop Societies Act, 1961 has
a by law which states that when the youngest original member of the Society retires
from Service, the Society would be dissolved and a condominium would be formed to
give individual ownership to each of the members.
My question is whether full stamp duty/differential stamp duty would be payable
when the condominium is formed. Presently the Society has conveyance deed executed
by the Developer.
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Ans. |
The question relating to payment of stamp duty law is different in different States
of India. Hence, it is recommended you get the best answer you should visit the
office of Sub Registrar at Mumbai. |
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Ques. |
"Hi,
Hope you are doing fine. I would like to know certain information regarding tax
pertaining from house property. If we sell a property and then buy another, what
is the tax liable for the same, and if there is a tax calculator for the same. Request
you to let me know the same.
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Ans. |
If you sell a property assuming that the property was held by you for more than
3 years and then you buy another property in such a situation the tax liability
for the same will get reduced in most cases it may be long-term capital gains only
because in this type of arrangement the amount spent by you in making investment
in the new property will be deducted from the gross amount of capital gain. |
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Ques. |
"Dear Sir,
I purchase a flat and paid Rs. 53,000/- as stamp duty and registration charges in
Feb 2007. I will get possession in July 2007. When will I be able to claim the tax
benefit in respect of the stamp duty & registration charges?
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Ans. |
Unfortunately, in respect of the facts stated by you the payment for stamp duty
and registration charges were made in February, 2007. Property was not registered
in that year. Hence, you cannot get any deduction in the financial year 2006-07
because the property was ready during the financial year 2007-08 but the payment
of stamp duty and registration charges were paid in the preceding assessment year
at that time the said property was not ready. Hence, unfortunately so but you will
not enjoy any tax deduction in respect of the same.
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Ques. |
"I want to know the present tax laws on "Second Home" Property in detail, especially,
the tax benefit that one can avail on his/ her second home property.
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Ans. |
In respect of the second residential property no tax benefit regarding interest
on loan will be available so also in respect of the repayment of the housing loan
no tax benefit would be available at all. However, for the second property one can
enjoy entire deduction in respect of interest on loan but only if the property is
put to rent. Similarly the second property will be subjected to wealth tax. Again,
if the said second property is put on rent for more than 300 days in a year. In
that situation the question of payment of wealth tax will not arise at all. |
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Ques. |
"(A) We purchased a flat in Mira Road (Thane). Area 810/- Sq Ft. @ 1,450/-Sq ft.
Stamp duty was paid on 23/05/06 and Registration done on 31/05/06. Possession letter
is dated 01/07/2006.
(B) Builder had issued TWO contracts. First one was Sale Agreement for 5+ Lakhs
and second one was an Agreement for Additional Amenities for 6+ Lakhs. Both were
between us and the builder only. No any other party. Builder had taken 48,000/-
towards Service Tax saying that he might get to pay the same if government implements
the rules. When we came to know about some Pune court verdict we called up builder
and asked for refund as there was no service tax to be paid. Out of 48,000/- he
refunded 25,000/- and now after so much of time pass he is saying that actually
we were supopsed to pay Service Tax and he would even provide Receipt for the same!
Is he correct? Are we not supposed to receive the balance 23,000/- ? What is the
actual rule about Service Tax on Residential property?
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Ans. |
(A) The payment of stamp duty and registration expenses will be allowed as a deduction
to you in respect of assessment year 2007-08 relevant to the financial year 2006-07.
(B) In respect of the Service Tax Law please approach the Service Tax Department
of your area. However, from practical angle I would like to suggest you that you
give an undertaking to the builder that if at a later point of time Service Tax
is applicable then you would make payment of the same till then he should refund
the entire amount taken by him as advance for payment of service tax. Your stand
specially would be correct because the builder has not made payment of the Service
Tax so collected from you.
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Ques. |
"Dear Sir, I would like to know whether Long Term Capital Gains from sale of Property
when computed without Cost of Inflation Index, Is it 10% or 20%? "
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Ans. |
Capital gain in respect of long-term capital gain after application of the cost
inflation index would be 20% only. There is no provision in the law to charge 10%
tax in respect of the long-term capital gain so received by you. |
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