06 May 2013
possession is not relevant for claiming deduction of interest on hoam loan. What is relevant is purchase of home by registereing the sale agreement with govt local authority. You will be allowed deduction of interest on hoam loan paid during the year subject to maximum of Rs150000/- in case of SOP.
07 May 2013
I disagree with experts Pradeep Agarwal and Sumit Arora. In my view,despite prepayment, you are eligible to claim the interest u/s 24 and the principal u/s 80C. However, in order to claim the interest you should be in possession of the house. So all preconstruction/prepossession interest will be allowed in 5 equal installments beginning with the year in which you receive the possession of the House Property.(Refer Explanation to Clause (b) of Section 24)
Language used in explanation is aquired and possesion is no where mentioned in the explanation. As per general understanding the property is said to be aquired when you have entered into agreement and paid the amount. Correct me if i'm wrong
07 May 2013
Thanks a ton for replying.. however would like to mention the followings 1. I availed the loan in FY 10 1. The house is under construction 2. Possession is yet to be given by housing board 3. Leese agreement of plot is executed and registered 4. after possession i would be renting out my house
Now i want to foreclose my loan so my worry is that if i foreclose my loan , will i still be able to claim rebate for the interests i have paid
07 May 2013
In your case Mr. Anand is correct. First construction should get completed within three years. For the period prior to the previous year in which property get constructed you will get deduction in 5 equal installments starting from the year of construction. You will get deduction of installments whether the loan is fully repaid or not.
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