Income tax Exemption on Home Loan Principal for underconstruction property ?

POSTED BY sathis.venugopal ON July 17, 2014 11:05 pm COMMENTS (3)

Hi,

I have taken home loan for a under construction property which was expected to finish by jan/Feb 2015 , On 80C income tax component we can claim for Income tax principal amount but how about for a under construction property? And in case if my property finishes by Feb 2015 how to claim the interest part in 24 b, in my company (IT) i have to declare the same before Dec ‘ 14 , can i show it during efiling for by next financial year.

3 replies on this article “Income tax Exemption on Home Loan Principal for underconstruction property ?”

  1. Raja says:

    It does not matter whether you pay EMI or pre-EMI. There are no deductions available if the property is under construction in that financial year. If you are getting possession in this financial year, you can claim stamp duty, registration, principal and interest paid during this financial year

  2. sathis.venugopal says:

    HI Raja,

    Thanks for your reply. Currently im paying my EMI in full not as any part (Pre-EMI) even in such case cant i show the principal for tax exemption? Also i heared about the registration & stamp chrges we can show for tax exemption. How will it work out? IN case as per the previous scenario im getting it by Jan/Feb ‘ 15 , can i show it for tax exemption.

  3. Raja says:

    You cannot claim ANY exemption either on principal or interest until the construction is complete and you get possession. Only in the financial year in which the construction is completed, you can start claiming exemption.

    Principal paid during under construction period cannot be claimed as exemption even after you get possession.

    Interest paid during under construction can be claimed in 5 equal installments over a period of 5 years after possession is obtained

    So if you have to declare anything in Dec14, make sure that you get possession before 31st Mar 2015. Else the claim will be illegal as per income tax dept.

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