I want to renovate my ancestral property. This property is in my father's name and is in Mumbai. I want to know the most cost-effective way to become the co-owner of this property and claim income tax deduction for the loan borrowed for renovation?
Answered on November 08, 2017
If the said property is your ancestral property then the same is a property of HUF and you are co-owner to the same.
However, if it is property of your father in his individual capacity then the most cost effective way is to make a gift deed and thereby transfer partial ownership as the gift so received will not taxable under the provisions of the Income Tax Act. The Stamp duty and registration charges would need to be paid as per prevailing state laws.
Once your co-ownership is determined then the interest on funds borrowed for the said renovation will be deductible to the extent of Rs. 30,000/- p.a.
