Section 24 provides two kinds of deductions, firstly, 30 % of the actual value and secondly, the interest payable on the capital borrowed for acquiring, construction, repair, etc., subject to the fulfillment of specified conditions. There is no provision for deduction on account of brokerage paid in connection with renting out of the property. Thus, the brokerage paid by you for renting out the two house properties will not be allowable as a deduction while computing income from house property.
In order to claim exemption under Section 54, you need to invest the capital gain amount in a residential house property. So, you will not get any exemption for buying the plot of land. Alternatively, you can invest the capital gains in National Highways Authority of India (NHAI)/ Rural Electrification Corporation (REC) bonds up to a maximum of R50 lakh within six months from the date of sale. These bonds have a lock-in period of three years.
Quotes–
I had purchased a flat in FY11 and sold it in December last year. With the money, I want to purchase a new plot and build a house. Can I claim exemption by investing the amount of capital gain in purchasing the plot?
—Ajay Bhatt
In FY16, I had received rental income from two house properties. Brokerage amount was claimed as deduction by me while working out the house property income. Is the deduction correct?
—Pavan Kumar
The writer is founder of RSM Astute
Consulting Group Send your queries at fepersonalfinance@expressindia.com