Comments on: Fixed or Floating interest rate home loan, which one is better?

By: amit

amit — Wed, 03 Aug 2016 12:02:30 +0000

I Have an ongoing home loan from Religare, recently i got an offer from http://www.loankuber.com, to port my home loan, the interest rate they are offering is 2% less than what i was earlier.
Do you think it is wise to port home loans?
if yes, what conditions do I need to take care of?

By: RAVI

RAVI — Wed, 04 Feb 2015 05:16:40 +0000

Dear Bharath Kumar
1. It is only in case where the 2nd house is located away from the 1st house which is occupied by the owner, the tax liability arises on the annual rental value of the 2nd house even if it is self occupied by the owner and even if it is not let out. However, if the assessee has a house property which consists of two or more residential units in the same house building and all such units are self occupied, the annual value of the entire house property shall be taken as nil as there is only one house property, though it has more than one residential units. As such the vacant portions can be deemed to be self occupied by you.
2. If the other residential units within the same residential building are let out and rental income is derived, the tax liability undoubtedly arises. But in your case since you have not received the rental income, there is no liability if shown as self occupied. In any case income tax authorities can levy income tax on the income derived. It is common knowledge a person cannot be assessed to income tax when he is not receiving any income from house property. If there is any such draconian law it can always be challenged in the court
3.Although you have not taken loan at the time of acquisition but taken it after acquision for the purpose of clearing the lease/mortgage amount already received by the seller, in my opinion it should qualify for deduction under section 24 since you have taken Loan against Property in connection with your house property. However, it is better you may convince the Income Tax authorities and only if they agree you can avail the deduction facililty under section 24. I hope your case is genuine which can be considered since you have shown the lease amount of Rs.20,00,000 adjusted in the sale deed itself for purchase of property which is nothing but carried forward loan for the purpose of acquiring the property..
S.RAVI

By: BHARATH KUMAR

BHARATH KUMAR — Mon, 26 Jan 2015 06:16:53 +0000

I have proof of electricity bill which shows nil meter reading. Do I have to pay tax even in genuine cases of not receiving rent?
BHARATH KUMAR

By: BHARATH KUMAR

BHARATH KUMAR — Mon, 26 Jan 2015 06:11:41 +0000

Okay. I agree some people may take rent in cash and show the house as vacant to avoid income tax as assumed by the government. But what about the genuine cases where the house remain vacant for non-availability of tenants.
BHARATH KUMAR

By: Pankaj Batra

Pankaj Batra — Sun, 25 Jan 2015 03:32:18 +0000

In reply to BHARATH KUMAR.

@Bharath
Your query already answered here: http://www.socialfinance.in/questions/5366/clarification-on-income-tax-liability-on-rental-income

By: BHARATH KUMAR

BHARATH KUMAR — Thu, 22 Jan 2015 09:17:21 +0000

Sir,
I had purchased a residential building 2 years back that is in 2012. It comprises 4 portions. 1 portion is occupied by me. One portion let out. Another 2 portions were on lease (rent free) for Rs.20,00,000 (Rs.10,00,000 for each portion) already received by the seller from the tenants. I adjusted Rs.20,00,000/- from the sale value and I have duly shown the same in the Sale Deed and registered the Sale Deed for the full sale value including the lease amount of Rs.20,00,000/- I did not take any home loan at the time of acquiring the residential building.
However In 2014 , when the lease period of the 2 portions came to an end I approached the bank for a home loan with a view of settling Rs.20,00,000/- to the tenants, I was denied home loan on the ground that home loan cannot be granted after purchase of the property.
As such I had taken Property Loan(Loan against Property) for Rs.20,00,000 at 12.75% interest rate. My EMI for 7 years is Rs.36113/- per month. Annual principal repayment is Rs.1,90,152 and interest repayment is Rs,244,199/- At present the 2 portions are kept vacant and I do not want to let it out since I intend to sell the residential building after 1 year as I have to complete 3 years from the date of purchase to avoid short terms capital gain tax.
I need following clarifications:
1. I learn that income tax have to be paid on the expected market rent of the 2nd house even if the house is not let out. Can you kindly clarify as to why we have to pay income tax on the notional rental income when in the first instance we do not receive any rental income? Besides from what source of income we will be in a position to pay income tax on the assumed rental income not received by us?
2. Are the other portions of residential houses in the same residential building considered as a 2nd house, 3rd house and fourth house for the purpose of Income Tax rules?
3. Am I eligible for deduction of interest under section 24 from the annual rent received/receivable and can I deduct interest amount of Rs.1,90,152/- paid towards Loan against Property?
BHARATH KUMAR

By: A.P.

A.P. — Wed, 12 Nov 2014 06:50:47 +0000

Dear Sir / Madam,

I had a home loan of 20L. Starting from Oct-2014 for 30 Years with interest rate of 10.15%

Being higher interest component compared to principle payment in each EMI. I wanted to withdraw my EPF against purchase of flat which is amounting 2.5L

Now i want your valuable suggestion for doing so; considering following;

(1) F.V. of 2.5L after 30 Years @ EPF Rate of 8.75% (with and without inflation @ 12%)
(2) Effective F.V. Saving by loan prepayment with 2.5L considering 30 years loan EMI with Rate of 10.15% interest

Request Expert to please advice.

Regards,
A.P.

By: Pankaj Batra

Pankaj Batra — Wed, 22 Oct 2014 07:57:21 +0000

In reply to vaibhav.

@Vaibhav
If you think this reduced rate would benefit more than the price you pay for it, you can go for it.
Some banks follow this practice to gain from old home loans.

By: vaibhav

vaibhav — Tue, 21 Oct 2014 07:20:25 +0000

Hi Pankaj, thanks for your reply, I am actually revering to the markup rate. The current RBI rate is 10.25%, Axis bank has done a .4% markup for me while sanctioning the loan, hence the ROI is 10.65% for me, now to reduce this markup rate to .25 from .4, they are asking a processing fee of 7500 + ST. So what I want to confirm if the bank is right in asking for this or there is a flaw which they are trying to exploit

By: Pankaj Batra

Pankaj Batra — Fri, 17 Oct 2014 11:22:05 +0000

In reply to vaibhav.

@Vaibhav
I am not sure why bank is asking for such payment.
You have a floating rate loan, so it should automatically be adjusted as per market rates.