I have purchased a house. At the time of purchase I had taken a loan of Rsx. I paid the full amount to the builder. The possesion of the property has not been given yet. My question is can I claim income tax benifits on the same.I mean interest on the home lean and principal payment.While deduction of interest u/s 24 is allowable only after completion of your house, no restriction is there for claiming deduction of principal payment u/s 80C. Suman, New Delhi
The aggregate of interest paid till the year of completion can be claimed in five equal instalments from the ffinancial year in which construction was completed. This is as per the Explanation given under section 24 of the I T Act .
Explanation : Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years:
For example , let us say your house is completed in FY 2010-11 and till the year FY 2009-10 you paid interest of Rs 2,00,000 and during FY 2010-11 , RS 75,000 as interest . Then for the Asst Yr 2011-12 (Fy 2010-11) you can claim deduction of interest u/s 24 as under
- Interest paid during FY 2010-11 RS 75,000
1/5 of accumulated interest Rs 2,00,000 Rs 40,000
Total interest claimable Rs 115000
In rest of four succeeding years, similarly Rs 40,000 will be claimed. But overall limit of allowable interest Rs 1,50,000 is applicable in every case which mean that in any case the deduction of interest for self occupied property can not be more than 1.5 lakh for rented property , there is no such limit.
Did you read this?
Is Completion of Construction Necessary For Allowance Of Deduction u/s 80C?
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I’m afraid, the opinion given with respect to claiming of deduction u/s 80 C may not be correct, as the specific provision, i.e., Clause (xviii) of subsection 2 of Sec 80C, clearly states that such a deduction is allowed only when the income from such house property is chargeable to tax, which in effect means, the construction of the property has to be complete.
Dear Doss
Thanks for taking time to comment.
However your apprehension is not correct. The word use is “Chargeable” and not Charged.
I actyally posted a detalied answer on this issue in May 2007 . Read the postiing (May 2007)http://www.taxworry.com/2007/05/is-completion-of-construction-necessary.html
Hi gd afternoonn,
I have taken home loan (450000,tenure20 years)from icici bank two years back at Floating rate.
The statement of interest paid during apr08 to march 09 issued from bank to me bank as follows
EMI amount/Prepayment if any:Rs 60989
Principle component:Rs 2695
Interest component:Rs 58294
Bank chrge me EMI Rs.5117 @ 13.25% /annum.
My first question is how should i plan to cover home loan over me.
My second question is I want to do part payment(Rs 150000) against my loan in month of april 09.
whether is it wise to increase interest& reduce tenure?if not how should i plan?
Hi,
I have two questions here:
1. Is the principal paid out before actually acquiring the property not entitled for income tax rebate in the 5 equated monthly installments?
2. Post acquisition, if I make a part-payment of the loan during the year, am I entitled to IT rebate on the same?