Long-term capital loss can be carried forward for 8 years

And the same can be set off only against taxable LTCG E-mailPrint Parizad Sirwall

My home loan was sanctioned in March 2013 for an under-construction property. The construction is expected to be completion during 2014-15. Is it correct that I cannot claim deduction for interest on the home loan when I file my income-tax return for FY2013-14? Is there anything from my home loan that I can use to claim tax benefits until the construction completes? —Sathya As the construction of the residential property is likely to be completed during financial year (FY) 2015 (2014-15), the deduction towards aggregate interest (including pre-construction interest) can be claimed only from FY15, the year in which the construction of the property would be completed. The pre-construction interest paid prior to FY15 shall be allowed as deduction in five equal annual instalments.

 Quantum of deduction towards interest on housing loan would depend whether the residential property would be considered as a self-occupied property (SOP) or a let-out property (LOP) or a deemed-let-out property (DLOP). If the property is treated as LOP/DLOP, the entire interest (including one-fifth of pre-construction interest) can be claimed as deduction against the net rental value/deemed rental value offered to tax as per the domestic tax law. If the property is considered as SOP, from FY15, you can claim deduction towards interest up to Rs.2 lakh per FY. You can also claim deduction under section 80C in respect of repayment of the principal portion of the housing loan subject to an overall cap of Rs.1.5 lakh from FY15.

While there is ambiguity on whether the property should be constructed to claim deduction under section 80C, a view may be possible to claim it when the property is under-construction subject to overall limit of Rs.1.5 lakh per FY. I have inherited two flats from my father after his death in 2013, which he had got constructed on his land in 2008. I sold one of the flats in 2013. Its value in 2008 was Rs. 18 lakh and I sold it for Rs. 24 lakh. I calculated the indexed cost of acquisition to be Rs. 26,35,051, but my sale price is Rs. 24 lakh. Does that mean I am not liable to pay any tax on this property? I have filed my returns wherein my annual income is Rs. 2.5 lakh. Can the loss of Rs. 2,35,052 be deducted from my coming year’s profit? —Narjis Fatima This is assuming you had calculated long-term capital loss (LTCL) correctly. As you would be incurring LTCL from sale of residential property of approximately Rs.2,35,052, you would not be liable to pay any tax. It can be set off only against the taxable long-term capital gains (LTCG) earned during the same FY. But if it could not be set off, then the balance can be carried forward to subsequent eight FYs and the same can be set off only against taxable LTCG.

By

Shah Mohammad Abdul Qadir

PGDM 3^rd year

IIMT College Of Management

Greater Noida,U.P.

And the same can be set off only against taxable LTCG E-mailPrint Parizad Sirwall

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