Puzzle of multiple cities, multiple home loans & delayed project

Dear Sirs,

I stay in Ahmedabad  (Gujarat) on rented flat, while working in Public limited company. I have a small flat (F1) at Vadodara (Gujarat) in my name whose home loan is already paid. The same is self occupied by parents.

Now I had booked two flats (one big (F2) and other studio (F3)) at Noida with Different builders in the year 2010 and 2012 respectively. Both under construction at the moment and possession shall take nearly 1 year. I have taken separate home loans for F2 and F3.  I would like to ask following questions:

01) I am already paying pre EMIs on flat no. F2. Am I eligible for Tax benefit on the Interest component even before possession?

02) You will observe, the under construction flats (2nd and 3rd property) shall cross 5 years from the date of booking before I get the possession. What would be maximum tax benefit on the Interest paid since booking that I can claim? can I take the Tax benefit on both houses (F2 & F3) simultaneously ?

03)  Once I get possession, which flat I should declare self occupied property ?  and why? 

04) How do I claim Income tax exemption on the interest paid .... through employer or  in the tax return? 

05) Can I continue to get HRA benefit as I am staying in a rented flat in a city different than the cities where I have flats? 

Thanks and regards,

Asked 2 years ago in Income Tax from Ahmedabad, Gujarat
Answers are given in very brief and may be explained in detail if required after 31st August.
1.	You cannot start claiming interest benefit  till you have taken possession. 
2.	You can get the deduction for total Pre EMI interest, from the year you take possession, however, in five equal installments and in five years from the year in which you take possession. Tax benefit of interest can be claimed on both the houses. However, you need to take in to account the provisions of deemed to be let out property, self-occupied property and the applicable limits. 
3.	The property on which you have smaller interest component should be treated as SOP and the other one as deemed to be let out as there is no limit of claiming interest on let out property, whereas there is a limit of Rs. 200000 for claiming interest on SOP.
4.	You may claim it either ways. If you are unable to claim through the employer, or if you have failed to do so then you claim it through the return.
5.	You can claim HRA benefit if your employer is in a different city than where your houses are . You can still claim SOP benefit on one property, the second property will have to be considered as deemed to be let out.
Sagar Jayawant
CA, Thane
27 Answers
5.0 on 5.0
  Talk to Sagar Jayawant
1) No you cannot claim deduction of Interest on house loan without obtaining possession.

2) If you offer income from rent from both the houses there is no ceiling of Rs 2 lakhs on deduction of interest on housing loan and same can be claimed without any limit.

3) It is not the declaring the self occupied property, but it is your judgement to decide which house is most convenient for use as self occupied  Larger amount of interest it can be claimed without any limit against income by way of rent from the said property.

4) it is left to your judgement how to claim, but employers cfo should know legal implication fully.

5) you can claim benefit of exemption of HRA.
Vijay N. Kale
CA, Hyderabad
248 Answers
4.9 on 5.0
  Talk to Vijay N. Kale

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