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Interest and principal deduction for self occupied house

Tax queries 508 views 1 replies

Mukesh Goel

CA CFA

103 Points Joined April 2009

Hi Experts,

Need your guidance in the following subject matter -

The assess brought the flat in 2009 which was just launched by the real estate group by paying the token money. The flat is under construction till date which means the ownership has not been transfered. The assess has paid till 90% of the value of the flat.

He has also taken bank home loan last year. and started paying the EMI. So he wanted to know about the interest and Principal payment deduction available to him under the IT act..

Question ask by him

1) can he get whole interest and principal deduction for the last fiscal year under the IT act. since he paid only 3 EMI has FY so will he get prioportionate deduction in respect of interest. ( means will get maximim amount of interest as 150000/12*3)

Please guide me

Thanks

Mukesh

Replies (1)

Kishore Dichwalkar

PRACTICING CHARTERED ACCOUNTANT

45 Points Joined March 2009

Dear Mukesh,

An Assessee can claim deduction of Interest on Borrowings U/s 24 of the Income Tax Act only after he receives possession and not when the property is under construction. However, he can claim the interest (1/5th every year for 5 years) he has paid during the construction period along with current interest only after getting possession.