BUSINESS

House building loan — benefit for repayment

Q: You have explained that Sec. 88(2)(xv) allows tax rebate for repayment of housing loan up to Rs. 20,000 (from assessment year 2001-02) and that interest payable on such loan will be deductible from property income. I would like to avail housing loan for construction of a house on the plot, which now stands in my father's name. Can a loan taken by me and repaid by me in such a case qualify for tax rebate and deduction of interest. Tax benefit is possible only if I take the loan since my father does not have taxable income.

A: Unless the property which is constructed belongs to the assessee and the property income is assessable in assessee's hands, the benefit of either rebate on repayment of loan under Sec. 88(xv) or deduction of interest under Sec. 24(b) will not be available. The assessee should have title or beneficial interest over the property. It can be got either by getting the plot by gift or long term lease or by purchase of the plot by the reader from his father.

Though it is possible to argue that superstructure belongs to the reader and that it is sufficient to entitle to benefits of both 88 (xv) and 24(b), such argument is controversial and is best avoided.

S. Rajaratnam