Home Loan - Income tax deduction on a under construction property

Hii 

If your Vila got complete upto dec 2020 Ie in current financial year then you can claim tax exemptions / deductions of whole year 

Hii 

you are right after getting completion certificate You can claim whole year principle and interest deduction

and for pre construction period can also avail 1/5 Of interest Subject to limit (pre construction interest + current year interest) 

one more thing 

construction completion is not mandatory but completion certificate is mandatory 

in some states on 25/40% Completion completion certificate issue 

thus you can also try for the same 

You can claim it if they are providing letter of allotment

- If the home loan is partly used for acquisition of villa and partly for construction of the villa, interest for the amount used for purchase of villa will be allowed as deduction in A.Y. 2020-21. Interest for the amount used for the construction will be allowed on the completion of the villa or repayment of loan whichever is earlier. In your case, villa will be completed in Dec 2020 i.e. F.Y. 2020-21 (A.Y. 2021-22) basis on the above provision, you can claim interest upto the period 31.03.2020 in five equal installments and interest for the relevant previous year.

- Set off of loss is limited to Rs.2 lacs and remaining will be carried forward.

- For the principal repayment, you can claim deduction on the payment basis u/s 80C.

Hi,

You can claim the deduction for interest and principal repayment starting from the year in which construction is completed.

If construction is completed in Dec 2020, then you can claim the deduction in Fy 2020-21.

yes, unless its completed, you cannot take any deductions (interest or principal)

yes, unless its completed, you cannot take any deductions (interest or principal)

yes, unless its completed, you cannot take any deductions (interest or principal)

yes, unless its completed, you cannot take any deductions (interest or principal)

Hello,

Since, as per the information provided the construction would complete by Dec. 2020. You can claim the deduction of Interest for current F.Y. 2020-21.

For interest up to 31st March 2020, it would be allowed as Pre Construction Period Interest in five equal installments.

Principal Repayment Portion would be allowed as deduction u/s. 80C.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani

Yes, interest deduction won't be allowed until the construction is completed.

As per income tax act one can take deduction of interest only when the house is purchased or constructed in your case also you would be able to take deduction of interest only from the year when the house gets constructed.

The interest paid before construction period would be available in 5 equal installment in later years.

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Thank you.

You cannot claim deduction of interest however you may claim deduction of principal u/s 80C as both are separate and needs to be dealt accordingly.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Hi,

You can claim deduction of principal repayment u/s 80C.

Deduction on home loan interest cannot be claimed when the house is under construction. This pre-construction interest can be claimed only after the construction is finished.

You can claim the deduction on interest for the home loan only from the year in which the construction of the property is completed.

Interest pertaining to pre-construction period is allowed as deduction in five equal annual instalments, commencing from the year in which the house property is acquired or constructed.

It is advisable to take a phone consultation for detailed discussion.