Interest on loan on house property
This query is : Resolved
11 July 2012
A LOAN HAS BEEN TAKEN TO PURCHASE A HOUSE PROPERTY BUT THE PERSON HAS NOT RECEIVED POSSESSION OF THE HOUSE PROPERTY. NOW THE PERSON WANTS TO CLAIM THE INTEREST ON LOAN AS DEDUCTION U/S 24 . IS THE INTEREST CLAIMABLE EVEN IF POSSESSION IS NOT RECEIVED ?
11 July 2012
If you have the Construction completion certificate. you are eligible for deduction as per section 24(b). Possession not matter.
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11 July 2012
i agreed the above experts
12 July 2012
IS IT COMMENCEMENT CERTIFICATE OR COMPLETION CERTIFICATE IF POSSESSION DOES NOT MATTERS ???
12 July 2012
Sec.24(b) specifies only Completion of construction, not mentioned any possession details.
13 July 2012
The issue is whether the Housing Loan taken for the residential house which is under construction eligible for deduction U/s.24.The Agreement to sale is executed so technically the acqusition is done.
01 August 2024
In the context of claiming a deduction for interest on a housing loan under Section 24(b) of the Income Tax Act, the key factors involve whether the property is considered as having been acquired or constructed, and whether the loan interest can be claimed during the period when the property is under construction.
### **Interest Deduction Under Section 24(b)**
**1. **Interest Deduction on Home Loan:**
- **Eligibility:** Section 24(b) of the Income Tax Act allows a deduction for interest on home loans up to ₹2 lakh per year for a self-occupied property or a rented property. This deduction is available only when the property is used for residential purposes.
**2. **Possession and Interest Deduction:**
- **Possession Requirement:** The deduction for interest on a home loan under Section 24(b) can be claimed even if the property is under construction, but there are specific conditions:
- **Under Construction Property:** If the property is under construction, the interest on the loan can be claimed, but the deduction for interest is typically allowed in the year in which the construction is completed. For the period during which the property is under construction, the total interest paid is accumulated and allowed as a deduction in five equal installments starting from the year in which the property is completed and possession is received.
- **Completion Certificate:** The completion certificate is required to claim the deduction for interest on the home loan for the period when the property is under construction. This certificate signifies that the property is ready for use, and it is necessary to claim the interest deduction for the under-construction period.
**3. **Commencement Certificate vs. Completion Certificate:**
- **Commencement Certificate:** This certificate is issued before starting the construction and is not relevant for claiming interest deductions.
- **Completion Certificate:** This certificate, issued by the local municipal authority, indicates that the construction is complete and the property is ready for occupancy. It is critical for claiming deductions for interest on loans for properties under construction.
**4. **Agreement to Sale:**
- **Agreement to Sale:** The execution of an agreement to sale alone does not entitle one to claim deductions for interest under Section 24(b). The crucial factor is whether the property has been completed and possession has been received.
### **In Summary:**
- **For Under-Construction Property:** Interest on a housing loan can be claimed under Section 24(b), but only in the year in which the construction is completed and possession is received. The total interest paid during the construction period can be claimed in five equal installments starting from the year of completion.
- **Completion Certificate:** It is important to obtain the completion certificate to claim the deduction. The commencement certificate is not relevant for this purpose.
- **Possession:** For claiming deductions, possession and completion are critical. The property must be completed and possession must be received to claim the interest deduction.
For exact advice tailored to your specific situation, consulting with a tax professional or financial advisor is recommended.
### **Interest Deduction Under Section 24(b)**
**1. **Interest Deduction on Home Loan:**
- **Eligibility:** Section 24(b) of the Income Tax Act allows a deduction for interest on home loans up to ₹2 lakh per year for a self-occupied property or a rented property. This deduction is available only when the property is used for residential purposes.
**2. **Possession and Interest Deduction:**
- **Possession Requirement:** The deduction for interest on a home loan under Section 24(b) can be claimed even if the property is under construction, but there are specific conditions:
- **Under Construction Property:** If the property is under construction, the interest on the loan can be claimed, but the deduction for interest is typically allowed in the year in which the construction is completed. For the period during which the property is under construction, the total interest paid is accumulated and allowed as a deduction in five equal installments starting from the year in which the property is completed and possession is received.
- **Completion Certificate:** The completion certificate is required to claim the deduction for interest on the home loan for the period when the property is under construction. This certificate signifies that the property is ready for use, and it is necessary to claim the interest deduction for the under-construction period.
**3. **Commencement Certificate vs. Completion Certificate:**
- **Commencement Certificate:** This certificate is issued before starting the construction and is not relevant for claiming interest deductions.
- **Completion Certificate:** This certificate, issued by the local municipal authority, indicates that the construction is complete and the property is ready for occupancy. It is critical for claiming deductions for interest on loans for properties under construction.
**4. **Agreement to Sale:**
- **Agreement to Sale:** The execution of an agreement to sale alone does not entitle one to claim deductions for interest under Section 24(b). The crucial factor is whether the property has been completed and possession has been received.
### **In Summary:**
- **For Under-Construction Property:** Interest on a housing loan can be claimed under Section 24(b), but only in the year in which the construction is completed and possession is received. The total interest paid during the construction period can be claimed in five equal installments starting from the year of completion.
- **Completion Certificate:** It is important to obtain the completion certificate to claim the deduction. The commencement certificate is not relevant for this purpose.
- **Possession:** For claiming deductions, possession and completion are critical. The property must be completed and possession must be received to claim the interest deduction.
For exact advice tailored to your specific situation, consulting with a tax professional or financial advisor is recommended.
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