If construction has been completed in this year, interest deduction shall be allowed starting from this year only irrespective of the fact whether possession is taken or not.
Claiming tax benefit on interest on home loan
Hi, I have the possession letter for my house from my builder, which has completed construction in this year, however registration has not yet been done. I wanted to claim tax benefit on Home loan interest paid in this year ( which is more than 3 lacs). I have not yet occupied the house and shall be doing in May, till which time it lies vacant and some interiors work shall be carried in it. Can I claim this benefit under section 24, while filing my income tax return. My organisation rejected my claim, stating that as property is not yet occupied it cannot be claimed. Please advise.
Asked 7 years ago in Income Tax
Possession letter is sufficient proof of ownership of property to claim interest on home loan. Secondly provision says completion of construction of HP and not registration of HP.
Hi,
In my opinion, you are eligible to claim the benefit of interest because the law says that Construction should be completed. It does not all about Registartion or possession.
Please feel free to call/ revert in case you need more clarity.
Thanks and regards
Abhishek Dugar
CA CS B.Com
In case your organisation doesn’t consider it, you can simply claim it while filing your ITR.
However the maximum amount of deduction allowable is Rs 200000 which can be set off with your income from all other sources.
Thanks,
CA Sourabh Pahuja
Hi,
Please elaborate what would be your deemed date of possession of the property. As per your explanation, it would be May. Hence you would not be eligible for ant tax benefit for this year.
To determine date of possession, you have to get a letter of offer of possession from the builder and reply in writing to the builder in affirmative on that letter. After you do so, this will be considered as your deemed date of possession. It would be immaterial when you actually move into the house.
Hence, if you are able to get such letter of offer of possession from builder, you will be eligible to claim interest but subject to a maximum of 2 Lakhs only.
Regards,
Hi,
According to me, your company is correct in disregarding the claim. To claim interest deduction the property should be occupied and the transfer of ownership should be transferred.
Regards,
Nikhil
Yes, they are right. For claiming interest benefit on HL you must have occupied the house.
However the interest paid by you before owning the house can be claimed in 5 years, 1/5th of the amount each year from the year when you occupy the house.
1.All the home loan benefits can be availed starting the year in which construction of property is completed.
2.For self occupied property maximum interest can be claimed is limited to Rs 2 lacs which is inclusive of pre-construction interest.
3.Pre-const interest can be claimed in 5 yrs .
4.Since you have taken possession, you are deemed owner and can claim benefits.
After taking possession, its your self occupied property (though vacant)and you can take tax benefits.
Ask a Chartered Accountant
Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
Ask a CA