Can an HUF purchase an immovable property? What are the exemptions available to it, if the property is self-occupied by the members of HUF? The karta of HUF is residing with his family in a house which is in the name of his wife and claiming HRA deduction. Now, can he purchase one residential property in the name of HUF for investment purpose. What are the exemptions available as regards interest on home loan and principal repayment?
Answer: Yes, an HUF can purchase and own any number of properties through its Karta. An HUF can have maximum of two properties as self-occupied properties in case these are actually occupied by the family members. In case the HUF owns more than two properties and these are occupied by the members for their use, the HUF has to treat any two properties as self-occupied and rest of the self-occupied properties shall be treated as deemed to have been let out and notional rent in respect of such deemed to have been let out properties has to be offered for tax even no rent is received in respect of such properties. So you can buy any number of properties on behalf of your HUF either for self-occupation purpose or as an investment.
Like an Individual an HUF can also claim deduction for repayment of home loan under Section 80C upto Rs. 1.50 lakh together with other eligible items. It can also claim deduction under Section 24(b) for interest paid on money borrowed to acquire the house property. The deduction under Section 24(b) is restricted to Rs. 2 lakhs for maximum of two self-occupied houses taken together. If the property is let out the HUF can claim deduction for full interest for money borrowed subject to restriction on its eligibility to set off of losses under the “Income from House Property” head against other heads of income up to two lakhs during the year. The unabsorbed losses under house property for the year can be carried forward and set off against house property income in subsequent eight years.
Balwant Jain is a tax and investment expert and can reached on firstname.lastname@example.org and @jainbalwant on Twitter.
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