Can I buy my dad's flat on loan and save income tax

Can I buy my dad's flat by taking a home loan on my name and owing the house and thereby save tax and show in my it returns.  My dad's flat is in Andhra and I live in Pune, so hereby I am planning to save more via health rent in Pune and interest on home loan both for more tax saving within my budget. 
Asked 4 days ago in Income Tax from Pune, Maharashtra
Hi

Buying your dad's flat would require registration of the property in your name which would involve stamp duty and registry costs which would thereby fail your motive. Incurring such costs to save taxes won't be a good option.
Get a cost benefit analysis done before doing this.
Lakshita Bhandari
CA, Mumbai
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In that case you can transfer the property in your name. Registration would be mandatory.

You can claim the benefits of loan and interest and also HRA benefits can be availed as flat is not in your city of work.
Lakshita Bhandari
CA, Mumbai
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Hi,

Yes, you can save taxes by doing so. You will be able to claim interest on your owned house and HRA on your rented house.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards
Abhishek Dugar
CA CS B.Com
Abhishek Dugar
CA, Mumbai
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You can buy the property from your father and claim interest on housing loan. The only issue is that there will be additional registration charges for the purchase of your dad's flat. Instead, if you can get the flat gifted to you by your father ( after taking into consideration your family issues, if any), then the registration charges will be lower compared to the registration charges payable on the registration of a sale deed. You may then take a mortgage loan, though it may cost slightly more than regular home loan. As you intend to let it out the property, there should not be any problem in claiming the interest in the income tax, whether it is a home loan or a mortgage loan. 

You need to balance out the costs involved in registration of sale deed vis a vis gift deed and interest on housing loan vis a vis mortgage loan.


 
B Vijaya Kumar
CA, Hyderabad
767 Answers
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