HI, I have purchased an under construction property a couple of years ago. There was a new scheme in which the option to Start EMI, for the disbursed amount was availed. Basically, we are paying pre emi+ (principal & interest )EMI. I was told that Tax exemption for Under construction property cannot be availed until possession. But what I understand is this is for pre emi, since I have already started paying the original EMI already shouldn't I be in a position to claim tax benefit. I falling into 30% slab, this makes us lose huge chunk on tax money. Is there anyway that this situation could be worked around.
This restriction is only applicable for amount of interest you pay as you get it's deduction once the construction is complete in the coming years but same is not true for principal amount so I think you can take deduction of principal amount paid and take deduction of interest after construction is complete.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Dear Sir,
Hope you are doing well !!
The Section 24 of the Income Tax Act states that if a property is still to be constructed, there will not be any tax deduction on the interest payment for all of those years.
However, the interest for the pre-construction period can be availed for deduction in five equal installments from the year the construction is complete.
Similar deductions u/s 80C for principal repayment is available for pre construction period.
- Deduction of Interest will be available from the year in which the construction will be completed.
- In case of principal, you can take the deduction under the overall limit of section 80C.
Hi,
No, you cannot claim the interest deduction till the time you receive the possession.
Hello,
Deduction of interest under Sec. 24 is available only after upon completion of construction of the property. While you can claim the deduction for principal repayment under Sec. 80C.
I hope this answer satisfies your requirement.
Regards,
CA Hunny Badlani
Hello Sir,
You can claim deduction on this interest amount for five years after possession.
So, if you have paid a total interest of Rs 6 lakhs while the house was under construction, you can avail of a deduction of Rs 1.2 lakhs for the next five years after possession.
However, you can claim deduction of principal repayment of loan u/s 80C.
