Where to Invest This New Year, a Plot or a House?

Tax treatment:

Implication of taxes is different for both the apartment and the plot. If you are seeking loan from bank to buy an apartment, the loan repayment allows you to get some deduction on taxes.

"The deduction of interest is allowed even if the same is payable and not actually paid," said Avinash Narvekar, tax partner, real estate practice, Ernst & Young India, a consultancy firm, reports Business Today.

And, when you seek loan from bank to buy a plot to construct a house, the implication of tax is same when you borrowing fund for apartment. But, the only difference is, the deduction on taxes applies from the year of completion of construction.

"Deduction of interest paid on loan for acquisition or construction of self-occupied property shall be available provided such acquisition or construction is completed within three years from the end of the financial year in which the capital has been borrowed," added Narvekar.

Although, there is no benefit on taxes if you hold a plot for investment purpose, still you can allege deduction for the interest you already paid.