Property-related financial queries answered by R.P. Deshpande, Director, Institute of Home Finance

I bought a flat in Lingampally in 2011. It was one of those flats mortgaged to GHMC, which is released later after the evaluation of the building plan by GHMC on project completion. I heard that for these flats you need not pay service tax or VAT. Is this true? I have to register the property as the builder has received NOC and I have to settle all pending issues.

Satyajit Sakhardande, Hyderabad

If you have purchased the flat which was under construction (in a complex with more than 12 numbers of units), both VAT and Service Tax shall be applicable, irrespective of whether the property was mortgaged to GHMC.

My daughter and her husband took a home loan of Rs. 47 lakh from HDFC Bank for a jointly held flat at Bangalore. Can the interest amount be claimed as deduction for both individuals at a ceiling of Rs.1.50 lakh each, as the accrued interest for the current FY is Rs. 3.78 lakh or at Rs. 0.75 lakh each at the maximum? The interest for the next year will be more than Rs. 4.8 lakh. Please clarify.

C.A. Thomas, Chennai

Your daughter and son-in-law both can claim deduction up to Rs. 1.5 lakh per annum separately towards the interest paid on the home loan availed, provided the property under finance is self-occupied. They can also claim deduction up to Rs. 1 lakh per annum separately towards principal loan amount repaid, along with specified contributions to PF, life insurance premiums paid etc.

My father has sold a house built in 1978 and has immediately purchased a new flat in October 2012 within a gap of two months. The original cost of construction of the house was about Rs. 95,000 and the selling cost of the house is Rs.1.3 crore. The flat cost is Rs. 75 lakh. The flat was furnished at a cost of Rs. 8 lakh. Please clarify the capital gains payable.

Sudhakar, on e-mail

The Capital Gains will have to be computed after considering the indexed value of the acquisition cost and after deducting allowable expenses (such as repairs, upgradation costs, legal charges etc.). Please approach a Chartered Accountant for computing the exact capital gains applicable in your case.

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