CA Harsh Roongta’s reply to a query on commercial property

I am a salaried person and have an on-going home loan from SBI. I intend to purchase commercial property either a shop or an office space after my home loan ends. Can I purchase a property by availing loan from a bank? Under which category the bank loan is available? Can I get tax benefit while filling IT Returns?

—Firoz Pirani

Of course you can take a loan for buying a shop or office premises. Typically, such loans are much more expensive at around 11-13% as compared to 9.35%-10% for a regular home loan. The down payment requirement is also higher at 30-50%. I am assuming you will give that shop or office premises on rent. In that case, any interest payable on a loan taken to acquire office premises or shop is deductible without any limit from the rental amount earned from such property and if the result of such a deduction is a loss from such property then that loss can be set off against your salary income. If you are using the shop/office premises for the purpose of your own business you can claim the interest payable on the loan as a deduction against your business income.

Credits DNA

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