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Can I take a home loan to construct a house in my native and rent it out to pay off the loan?

Answered as per Hanafi Fiqh by Darulifta-Deoband.com
From your previous answers I came to know that taking home loan is not permissible as per Shariah. But my case is different. I am working in Bangalore and have taken home for rent. In my native we have own house which is made of sand (mitti) without basement and we are living in that more than 10 years. Now we are planning to construct the house. The issue is I do not have that much money to construct house in one shot. Since I am getting good salary, I can repay the loan. Without taking the loan and want to construct the house, for me it will take more than 8 years. In this case;
(1) Can I take the home loan to construct the home in my native?
(2) If it is permissible, then can I build two or three floor building and give it for rent?
(3) From the rented money can I pay the home loan?
(4) Since I am employee of a software company, can I show this home loan for tax redemption?

Answer

(Fatwa: 359/273/H=1434)

(1) The ruling regarding taking home loan for constructing home in native place is the same which was written in previous fatwa.
(2) The ruling of three or four storey building is the same which was written.
(3) There is no harm if it was paid in this way.
(4) It is not lawful to produce fake papers. And by producing original documents within legal process whatsoever concession is gained it shall not be termed haram or sin. However, the curse of dealing interest based loan is different.

Allah (Subhana Wa Ta’ala) knows Best

Darul Ifta,
Darul Uloom Deoband

This answer was collected from the official ifta website of Darul Uloom Deoband in India.

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