by Advocate Mr. Hari
Raheja
Investments in property (House and
Plot of Land) in India will give an NRI (Non Resident Indian) or / PIO ( Person of Indian Origin ) many benefits.
1. Can an NRI or / PIO borrow locally in India & invest
in property?
Yes, housing and plot loans can be
granted by banks and HFCs (Housing Finance Companies) to non-residents for the
purchase of a residential property for self use. But not for starting a real
estate business.
2. Can an NRI or
/ PIO borrow abroad & invest in
property here?
Yes, there is no restriction.
3. Will interest on a
hosuing loan borrowed for an investment in property be allowed as a deduction?
Where the residential property has
been acquired constructed, repaired, renewed or / reconstructed with borrowed
funds, interest payable up to Rs. 1.50 lakhs is allowed as a deduction in case
the property is self-occupied & does not earn any income.
Where a property is rented out and
earns income through rentals, the entire interest will be allowed as a
deduction against the rental income.
4. Will interest paid
for a loan borrowed abroad qualify for deduction?
No. Any interest which is payable
outside India, on which tax has not been paid or / deducted & in respect of
which there is no person in India who may be treated as an agent will not be
allowed as a deduction.
5. Is purchase cost
or an installment allowed as a deduction?
Purchase cost or installments paid are
allowed as a deduction along with other eligible investments up to a limit of
Rs. 1 lakh against the total income.
6. What is the
difference between long-term and short term gains?
Where the asset (property) is held for
less than 36 months (3 Year), it will be a short term asset giving rise to
short term gains. Where the asset has been held for more than 36 months, the
gains will be long term gains. .
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