Section 24b Interest refund on commercial property

Dear Querist,

Interest is not fully “refundable”; it reduces taxable income. If the commercial property is let out, the actual eligible loan interest can be deducted under Section 24(b) without any fixed monetary limit.

There is no maximum loan tenure, so a five-year loan is acceptable. Any pre-acquisition/construction interest is claimed in five equal annual instalments.

You are correct that principal repayment for a commercial property does not qualify under Section 80C. You may continue under the new tax regime, but any resulting house-property loss cannot be adjusted against salary or other income or carried forward.

If the property will be used for your own business, Section 24(b) will not apply; the interest must be considered under business-income provisions.

For a more detailed review of your case, you may book a phone consultation.

CA Shubham Goyal

Dear Sir,

Hope you are doing well.

1. It depends on how the commercial property is used.

• 
  If the property is let out (rented): The interest on the loan is generally allowable as a deduction while computing income from house property under Section 24(b). However, the set-off of loss from house property against other heads of income is currently restricted to ₹2 lakh per financial year. Any unabsorbed loss can generally be carried forward for up to 8 assessment years, subject to conditions.
• 
  If the property is used for your own business or profession: The interest is generally not claimed under Section 24(b). Instead, it may be claimed as a business expenditure under the provisions relating to business income, subject to the applicable conditions.

2. No. Section 24(b) does not prescribe a maximum loan tenure. Whether your loan is for 5 years, 10 years, or longer does not affect the eligibility. You can generally claim the interest deduction for the period during which interest is payable, subject to the applicable provisions.

3.Your understanding is correct. Deduction for repayment of the principal amount under Section 80C is not available for loans taken to purchase commercial property.

4.Under the new tax regime, the availability of deductions is restricted. Whether the interest deduction can be claimed depends on the nature and use of the property. This should be evaluated based on your specific facts.

Considering the facts involved, it would be advisable to schedule a telephonic consultation for a detailed discussion and a proper evaluation of the tax implications.

Thanks & Regards,

Payal Chhajed