Hello and welcome to Part 5 of the Income Tax education series brought to you by H&R Block, the global leader in filing Income Tax Returns.
Today we will cover house property. So, what deductions do you get from taxable income on purchase of house property?
You can get a deduction of home loan interest repayment under section 24 of the Income Tax Act and a deduction of the principal amount under section 80C. Both these deductions can be claimed for houses of which the construction is completed. Processing fees paid at the time of loan sanctioning can also be claimed as interest repayment under section 24. Apart from this you may also claim the amount of money that you paid for stamp duty, registration fee and other expenses in the process of transferring the property in your name under section 80C.
This deduction can however be claimed in the year of purchase itself. You need not wait till the construction of the house property is complete to claim this deduction. E.g. if you have purchased a house in April 2015 and paid Rs. 1,00,000 as stamp duty and registration charges then you can claim these expenses as a deduction u/s 80C for the FY 2015-16. The amounts paid as interest repayments and processing fees paid will accumulate and can be claimed as a deduction from the year in which the construction gets completed. Principal repayments made before the construction of the house is complete, cannot be claimed later and will lapse.
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