Income tax time limit relating to purchase or sale of flat for claiming profit

Eligibility to claim deduction for home loan/borrowed amount

You are entitled to claim deduction under section 80C up to Rs.1.50 lakh in a year, in respect of principal repayment of home loan taken from specified institutions or institutions, similarly to the interest paid for the amount borrowed. are also entitled to claim deduction in respect of for a house under Section 24(b). Both these deductions on repayment of principal and interest are available only if the property is in your possession and is habitable. Hence, you will not be able to claim this tax benefit till the time the construction of the house is completed and you have got it, even if you have already started repayment of your home loan through EMI.

However, in respect of interest paid during the construction period, you can claim the aggregate of such interest paid in five equal installments commencing from the year in which you get possession within the limits specified below. Hence it is important for you to watch the progress of construction to ensure that the tax benefit for home loan is not lost.

Completion of construction within specified time limit for claiming interest paid

You are allowed to claim deduction for the interest paid in respect of the amount borrowed for purchase/construction/repair/renovation of your house property. The quantum of deduction available depends on whether the house property is self-occupied or let out. You can claim deduction for full interest in case the property is let out, but the deduction in respect of self-occupied house property is limited to Rs.2 lakh in a year, provided the house is constructed for a period of five years. Complete within. At the end of the year in which the money is borrowed in case of self-constructed or booked under-construction property. If you fail to complete the construction within five years, your eligibility to claim interest on the amount borrowed is reduced to thirty thousand rupees in a year. It is interesting to note that this restriction does not apply in case the house is let out.

Please note that a person is entitled to a maximum of only two house property which is self-occupied and in addition the additional property/properties are deemed to be let out and you need to offer estimated rent for tax. A maximum claim of thirty thousand or two lakh rupees is allowed for all self-occupied properties taken together.

While one is allowed to claim deduction in respect of multiple house properties, there is a restriction of loss of two lakh rupees under the head “income from house property”, which can be set off against other income during the year and the balance Loss not set off is allowed to be carried forward for adjustment against income from house property in subsequent eight years.

To claim exemption in capital gains

You can claim exemption for long-term capital gains if you invest in a residential house property within the time period specified under section 54 and section 54F. Section 54 is applicable in respect of long-term capital gains on the sale of a residential house whereas Section 54F applies. In respect of long-term capital gain on sale of any capital asset other than a residential house. Section 54 requires you to invest only the calculated long-term capital gains, but for Section 54F you have to invest the net return received.

In both the cases you have to buy a house within two years from the date of sale of the property. If you have acquired a residential house within one year prior to the sale of the property, you can claim these deductions. However, if you either get your house constructed on your own or your book is an under-construction residential house, you get an extended period of three years.

However, if you fail to buy/construct the residential house within the specified time period, you lose the earlier exemption claim and the amount of long-term capital gains claimed earlier becomes taxable in the year in which the date There is a period of three years. The sale period of the asset expires. You may still be able to claim the deduction if you have invested the required amount and have not got possession but the matter may go for litigation.

If you sell or transfer a residential house on which you have claimed exemption under either section 54 or 54F within a period of three years, the previously claimed long-term capital gain shall be equal to the short-term capital gain in that year. becomes taxable in the form in which you sell or transfer the house.

Repatriation of tax benefit in respect of home loan on sale of house before five years

If you have availed tax benefit under section 80C in respect of repayment of home loan, the claimed tax benefit will be refunded if you sell the house within five years from the end of the year in which the home loan was taken. So when you are planning to sell the home taken out of the home loan, be careful as you may have to pay tax by missing the deadline of a few months.

From the above discussion it becomes clear that one must be aware of the various timelines under the Income Tax Laws to claim and retain the various tax benefits. If you are not careful about these deadlines by the law, you may be deprived of some income tax benefits.

Balwant Jain is a Tax and Investment Specialist and can be reached at jainbalwant@gmail.com and @jainbalwant. Twitter