17 March 2008
A person has raised loan from bank to finance the purchase of a flat. The amount is payable to the builder in installments based on progress made in construction. Registration of the flat will be done in his name after he pays 90% of the purchase price.
The person has paid 75% of the purchase price to the builder till 31 March. The bank has charged interest on the loan amount drawn. Since the person has paid only 75% of the total purchase price the flat is not registered in his name yet.
1)Can he claim deduction u/s 24 for interst paid eventhough the house is not registered in his name?
2)If the answer to above question is 'No', is it possible to claim deduction for interest paid before registration, during the financial year when the registration takes place?
(2) Interest relating to the period preceding the FY in which Registration is completed will be aggregated and allowed as a deduction in five equal installments beginning from the year in which the construction is completed.
You may please visit http://www.apnaloan.com/taxtips/home-loan-india/taximplicationonpreemi.html
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