Home loan principal and interest rebate

This query is : Resolved

Rashmi (Querist)
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16 August 2012 Dear Experts,

I am planning to buy home which is under construction apartment. This will be completed in year 2015 beginning. For this i want to apply the home loan. Now the worry is as below-

1. What will tax impact if i start paying EMI now (Principal and Interest both)?

2. if i dont get any tax benefit now then can i claim it later when i get the possession in early 2015.

Kindly give valuable input on this.

Thanks in advance.

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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17 August 2012 Interest paid before construction is completed is not available as deduction during the year of payment.

Instead the interest paid before the construction is completed is available as deduction for a period of 5 years beginning from the year of completion.

E.g: If you pay an interest of Rs.2lacs,Rs.2.4Lacs and 2.8lacs in 2012,2013 and 2014 you will be eligible for deduction of the interest paid (2+2.4+2.8Lacs = 7.2lacs) for five years beginning from 2015-2016.

As for the principal repayment, no deduction u/s 80C is available if the construction of house is not completed.

CA VISHNU GAVKARE

CA VISHNU GAVKARE (Expert)
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17 August 2012 Further to claim deduction of Self Occupied Property construction should be completed within 3 years from the 1st April of the year immediately after the year in which construction is started. i.e. if construction is started in 2012-13 then it should be completed by 31.03.2016.

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