Are New Residential House Eligible For Deduction Under 80C?

Yes, investment in new residential house is eligible for deduction under section 80C of the Income tax Act, subject to the satisfaction of the conditions of that section in regard to qualifying amounts in the following circumstances to the individuals/Hindu undivided families.

The following payments qualify for the deductions-

-> Any installment or part payment of the amount due under any self-financing or other authority engaged in construction and sale of house property on ownership basis.

-> Payments made towards the cost of purchase/construction of new residential house property during the previous year are eligible for deduction under section 80C.

-> The cost of any addition or alteration to, or renovation or repair of, the house property.

-> Repayment of the amount borrowed by the assessee from-
i. the Central Government or any State Government, or
ii. any bank, including a cooperative bank, or
iii. the Life Insurance Corporation of India, or
iv. the National Housing Bank, or

-> Section 80C provides that in computing the total income of an assessee, deduction shall be provided in respect of various payments/investments made as included in the aforesaid Section subject to a ceiling of Rs.1 lakh on the aggregate amount of such payments/investments.

-> Section 80C(5) stipulates that in case an assessee transfers the house property referred to above before the expiry of five years from the end of the financial year in which possession of such property is obtained by him, or receives back, whether by way of refund or otherwise, any sum specified above, then no deduction shall be allowed with reference to any of the sums referred to above and the aggregate amount of deductions of income already allowed in respect of the previous year or years shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.

Source: Income Tax Department

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