A home loan borrower can claim Income Tax exemption on interest payments of up to Rs 2 lakh and another Rs 1.5 lakh under Section 80 C towards the principal repayment for a Self-occupied property.
However, you cannot seek these tax benefits in the pre-construction phase (i.e. no tax deductions available for an under construction house), even if you have started repaying the housing loan through EMIs.
Often it is seen that housing loan is taken but the possession of the property is received in the next or later financial years. It may be because the property is not completed or constructed.
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.
In this post, let us understand – What is Pre-construction period interest? How to calculate pre-construction period interest on home loan? How to claim tax benefits /deductions on interest payments of an under construction house / Property?
Under Construction House & Tax Provisions on Home Loan
Let us understand certain terminologies related to an Under Construction house and home loan tax benefits.
What is Prior Period? (Under construction period)
Prior Period means the period from the ‘date of borrowal of the home loan up to the end of the Financial Year’ immediately preceding the financial year in which acquisition was made or construction was completed.
The period from borrowing money until the construction of the house is called pre-construction period or under construction period.
For Example: If you have taken a home loan say on 01-06-2013, and the construction of the property is completed on 01-06-2014. The period commencing from 01-06-2013 to 31-03-2014 shall be treated as ‘Prior Period’.
What is Prior Period Interest (PPI)? (Pre-construction period interest)
Prior Period Interest means the interest from the ‘date of borrowal of the home loan up to the end of the Financial Year’ immediately preceding the financial year in which acquisition was made or construction was completed. The interest portion paid during the under construction period / Prior period is known as ‘Prior Period Interest’.
For Example: If you have taken a home loan say on 01-06-2013, and the construction of the property is completed on 01-06-2014. The home loan interest paid for the period commencing from 01-06-2013 to 31-03-2014 shall be treated as ‘Prior Period Interest’.
How to calculate Prior Period Interest or Pre-construction Interest?
Step 1: Identify the date of borrowal of Home Loan
Step 2 : Identify the Date of completion / Acquisition (possession)
Step 3 : Identify the last date of the Financial Year immediately preceding the date of Completion / Acquisition
Step 4 : Calculate Prior Period. Prior Period = Period from Step 1 to Step 3
Step 5 : Calculate Prior Period Interest i.e., the total interest paid during the prior period.
Step 6 : Calculate Allowable prior period interest (APPI). APPI = Prior period interest as per Step 5 divided by 5.
Let us now consider an example to compute PPI and how it can be claimed as a tax deduction under Section 24.
Prabhas took a loan of Rs.10 lakh to start construction of his house property in Bangalore in July 2012. He has been paying EMIs ever since. The construction was completed in January 2015 and he received a completion certificate. This house has been on rent from February 2015. He now wants to file his income tax returns for FY 2014-15 (AY 2015-16).
Assuming his year wise interest payments (excluding Principal component in EMI) are as below;
FY 2012-13 = Rs 60,000 (July 2012 to March 2013)
FY 2013-14 = Rs 80,000 (April 2013 to March 2014)
FY 2014-15 = Rs 70,000 (April 2014 to March 2015)
Step 1 : Date of home loan acquisition – July 2012.
Step 2 : Date of completion of construction is – Jan 2015.
Step 3 : Applicable last date of FY for Prior Period calculation – Mar 2014.
Step 4 : Prior Period is the duration between July 2012 to Mar 2014.
Step 5 : Prior Period Interest is the total interest payments made between July 2012 and 31-Mar-2014. So, the total interest paid during under construction period is Rs 1,40,000 (Rs 60k + Rs 80k). This amount can be claimed in 5 equal installments of Rs 28,000 each starting from Financial Year 2014-15 (AY 2015-16).
Also for the interest paid during Financial Year 2014-15 ie Rs 70,000 can also be claimed along with Rs 28,000 in Assessment Year 2015-16.
The total interest that can be claimed as tax deduction under Section 24 for AY 2015-16 is Rs 98,000 (Rs 70k + Rs 28k).
(The remaining 4 installments of Rs 28,000 can be claimed in FY 2015-16, FY 2016-17, FY 2017-18 & in FY 2018-19 as Prior period interest in addition to normal interest / post construction period interest for the respective financial years)
Kindly remember that the aggregate limits under Section 24 are still applicable. The prior period interest installment plus ‘normal interest’ is allowed to the extent of Rs 2 Lakh only in-case of a Self occupied property. There is no such restriction if the property is a ‘Let-out’ one.
Under Construction Property & Income Tax provisions: FAQs
- I have taken a loan for renewing my house, is PPI applicable? – Prior Period Interest concept is not applicable if the loan amount is utilized for repairs, renewal or re-construction.
- What happens if Loan acquisition date and construction completion date fall in same financial year, do I need to claim under construction period interest in 5 installments? – If both, date of loan taken and occupation date / completion date had taken place in the same Financial year, entire interest pertaining to pre-construction period can be claimed along with regular interest in the same assessment year. There is no need to claim the prior period interest in 5 installments.
- Can I claim Principal component that is repaid during the pre-construction period? – Principal component of your EMIs paid during prior period is not eligible for any tax deduction.
- What is the difference between Pre-EMI interest & Pre-construction interest? – The pre EMI interest term given in Loan Statement is not necessarily same meaning as pre construction period as per income tax act. Interest up to the end of Financial year ,immediate proceeding to the year in which house is completed is known as Pre construction period / Prior period interest. Whereas, Interest due up to the start of payment of First Installment is known as Pre-EMI interest.
For example : Suppose a home loan is taken on Jan ,2012 and House is completed on 31.01.2015, in that case pre -construction Interest is taken from Jan 2012 to March 2014. Suppose bank has granted and disbursed the Loan in Jan 2012 but EMI started from Jan 2013.Then Interest from Jan, 2012 to Jan 2013 is treated as Pre-EMI interest by the bank.
- Can I get tax benefits if I take a loan to buy a Vacant plot or land? – No. You get no tax breaks if you take a loan to buy a plot of land.
Latest news : Budget 2016-17 – Home Loan Tax Benefits & Self Occupied Property :
Existing rule : To claim tax benefits on home loan of a Self-occupied Property, the construction has to be completed within 3 years from the end of the Financial Year in which the capital (home loan) borrowed.
New Provision (effective AY 2017-18) :
In view of the fact that housing projects often take longer time for completion, it is proposed that clause (b) of section 24 be amended to provide that the Deduction under the said provision on account of Interest paid on Home Loan for acquisition or construction of a self-occupied house property shall be available if the acquisition or construction is completed within FIVE years from the end of the financial year in which capital was borrowed.
This amendment will take effect from 1st day of April, 2017 and will, accordingly apply in relation to assessment year 2017-2018 and subsequent years.
Generally, the prices of under construction properties are lower than the prevailing market rates in a locality. So, some home loan buyers do prefer to buy them. But do it with open eyes, because apart from the obvious risk of delay in construction, you may also get some other financial hiccups if there are long delays.
The delayed possession of the house could exert severe financial pressure on the home buyer if he / she have to pay the EMI as well as the rent at the same time. Moreover, if the project gets stuck or even defaults, the home buyer is still liable to pay the interest and the principal component of the disbursed amount to the bank.
If there is a delay in the possession of the property, the tax benefits also get delayed to that extent.
I hope you find this article informative. Kindly share your comments 🙂
(Image courtesy of dan at FreeDigitalPhotos.net)
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Hi sreekanth,
I have booked a under construction flat on December 2015 . i am paying the money according the built up schedule . till today i have paid 75 % to total cost . from December 2015 onward i am carrying home loan . the last disbursement of home loan will be at the time of possession . the builder will give possession on May 2019. i have some questions
1. will i get the income tax benefit of 2 lakhs after getting possession? if not then how much will i get?
2. after getting possession if the total interest (1/5 of prepossession interest+current FY interest ) exceeds 2 lakhs then the excess amount will carry forward to next financial year?
please answer me .
Hi Sreekanth,
I took home loan in 2011 May on under construction flat and got possession on Feb 2017.
I want claim pre possession interest for tax benefit.
Below are the details of loan and possession date:-
• Home Loan Date of Sanction – 1 May 2011
• Date of Possession – 5th Feb 2017
• Interest paid prior to possession – 400000 (4 Lac)
Now my query is:-
1) What is the prior interest amount I can claim year on year for next 5 years? You can see that loan sanction date is in year May,2011 and possession date in Feb,2017
2) As I got possession in Feb 2017, Can I claim prior period interest while filling my ITR return for this year.
3) What are the documents I need to provide while claiming prior period interest.
Thank you in advance.
Dear Ayush,
1 – 1/5th of PPI (Rs 4 Lakh)
2 – Yes, you can claim the 1st installment + Regular interest payments (subject to ceiling limit, if any).
3 – There is no need to submit any documents along with your ITR to claim PPI.
Just for clarification my loan started in 2011 and today we are in year 2017 which means more than 5 years so what is the maximum interest amount i can claim is it 30,000 or 2 Lac
Dear Ayush,
Yes, its five years from the end of Loan disbursement year (2011-12).
So, you can claim PPI installments along with regular EMIs.
Hi Sreekanth,
Thanks a lot for this article. It is quite informative and helpful.
I have just one query – if the current EMI (pot possession) and the interest paid earlier totals to more than INR 2 lakh, how can one recover the loss.
We had purchased an under construction flat in June 2014 and have started paying EMI ever since. We got the possession in April 2017 and have now shifted to the new flat.
1. The monthly EMI is ~Rs. 50k. Is there a way to determine what portion of this is interest and what is principal ?
2. As you can see, our annual EMI is ~INR 6 lakh. Since this amount is exceeding the cap of INR 2 lakh, how can I declare the EMI paid from June 2014 to March 2017.
Look forward to your reply.
Warm regards,
Meetali
Dear Meetali,
1 – Yes, you can ask for Ammortization schedule from your Banker/lender and even the loan statements can have the bifurcation details.
2 – You can claim 1/5th of PPI as first installment along with regular interest payment, subject to ceiling limit of Rs 2 lakh from FY 217-18 onwards. The rest of the unclaimed loss can be carried forward to next Assessment year.
Kindly read : List of important Tax exemptions from FY 217-18.
Dear Sreekanth,
Thank you very much for the prompt reply. Sorry if I may sound repetitive, but I would need some more clarification as below:
1. I have asked my bank to provide me the bifurcation and they will send it soon. Can the principal amount also be divided in 5 installments for the pre possession EMIs? How can we claim the principal paid during the PPI period?
2. If the 1/5th of PPI amounts to more than INR 2 lakh (single installment), then can I carry forward the current year interest? As per the article link shared by you, section 24 B says “The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years”. Does this refer to the post possession unclaimed interest?
Thank you for taking out time and replying to each and every query and enlightening ignorant souls like me. Highly appreciate it.
Warm regards,
Meetali
Dear Meetali,
1 – Principal amount paid during the under-construction period can not be claimed .
2 – IT refers to the entire calculation which is done under ‘income from house property’. Kindly note that this can mostly be a dead loss as next year also you may incur more than Rs 2 lakh loss and again will be carried forwarded.
Dear Mr Sreekanth,
I took home loan on 2013 August on under constraction flat. I got possession on Feb 2015. I will claim preposseion interest for tax benefit in next five financial year stating fron 2014-15 in equal portion. But my home loan will be paid and closed in FY 2016-17. Out of five equal portion 3 portion I am claiming beore colosing my home loan. Can I claim the income tax befefit of other two portion of prepossesing interest in FY 2017-18 & 2018-19 even ater completing (closing) the loan in FY 2016-17.
Dear Mr Pal..No, you can not claim tax benefits on closed home loan account.
Hi Sreekanth,
Thanks for this article, I have a query…
I took a home loan in Dec 2016 from SBI for an under construction property and I am expecting to get the possession by November 2017.
I want to declare my investment in the company in which I am currently employed with. With regards to the same, I have few queries which are mentioned below:-
1. Can I declare my interest paid during FY 2017-18 under “LOSS ON HOUSE PROPERTY” section.
2. Can I get an exemption under INCOME Tax for the interest paid during January 2017-March, 2017
Request you to kindly respond to the above queries at the earliest so that I can take an immediate action on the same.
Thanks,
Mithilesh
Dear Mithilesh,
1 – You can declare, but your employer may ask for Possession certificate to approve your request. In case they do not approve it now, you may re-submit later or can also claim the tax benefits while filing your ITR for AY 2018-19 (if you get possession of property during FY 2017-18).
2 – Yes, you can claim in 5 equal installments along with regular EMIs (subject to ceiling limit).
Kindly read:
Budget 2017-18 – Important proposal on Home loans
Hi Sreekanth,
I’ve taken home loan of 20 Lacs in mar 2017. Property for which I’ve taken this loan is still under construction.
My EMI has been started however full disbursement is not yet done. So only interest is getting deducted.
My question is:
1. Can I get any tax benefit even if still possession not received.?
What can be done in above case?
Please help..
Thanks in advance
Dear Swapnil ..
1 – No. You need to wait till you take possession of property to claim tax benefits.
Read : List of important Income Tax Exemptions for FY 2017-18 / AY 2018-19.
Hi,
Thanks for the good article. I took the housing loan on Feb 2016 and started paying full EMI right from March 2016. The builder sent a completed & ready for possession letter by March 2017 , however I am yet to take the possession immediately as some pending items like parking are there to be finished to my satisfaction (withholding a small sum relevant for parking & maintenance amount). I may occupy the property by Jun 2017 most probably.
Since I am not sure if that letter of completion is enough to claim tax deduction during FY 16-17 (AY 17-18) I had waited and did not disclose this as a loss to my employer during year end closing period (am paying as TDS since a salaried employee) and paid full taxes as is applicable like past years. Now while filing the income tax returns can I give this information to my auditor and include the interest paid during FY 16-17 & 1/5 of interest paid in March 2016) during the filling process in July 2017?
Since the taxes are already withheld by my employer during FY 16-17, how the interest amount (if I include now during tax filing in July 17) be credited back to me by the IT department in due course? I do not have clear idea on this.
Or should I sum all the interest component right from March 2016 to March 2017 be equally divided into 5 and claimed starting from this FY 17-18 to FY 21-22. Or I shall forgo the interest paid during March 2016 and then divide the interest paid during FY 16-17 alone into 5 parts and start claiming that from now on in FY 17-18 , apart from current year interest.
Will be grateful for your advice!
Thankyou
Dear Gobi,
Yes, you can give the necessary home loan statements to your Auditor and can re-calculate your Tax liability.
If the TDS paid by you is more than the tax liability (after claiming interest payments as loss), you will get REFUND from the IT dept.
You can claim March 2016 interest payment in installments (PPI) and also can claim regular payments for FY 2017-17 / AY 2017-18 (subject to ceiling limit).
Dear Sreekanth Reddy,
Thank you for your clarification and advice. Earlier I had used lot of mutual fund related information from your website and they are very useful.
Have you published any long term (at least 15 years or more) SIP suggestions for wealth generation or retirement corpus etc? If yes can you point them?
Dear Gobi,
You may consider the list provided in my Best Equity funds article..
Thank you Sreekanth Reddy!
Dear Sreekanth,
very informative article.
I have bought a house in sep 2014 and got possesion in june 2016. my hoam loan started in sep 2014 itself.
I rented the property immediately in august 2016.
I have following queries.
1. I have paid 330000 interest this FY and 97000 principal repayment. can I claim both these in my ITR?
2. If I have to claim 1/5th of previous interest paid which is aprox 120000 per year where exactly do I declare it in the ITR 2? will it be combined with this years interest so 330000+120000= 450000? will I put this combined figure in schedule HP H”-interest payable on borrowed capital”or this 120000 needs to be declared somewhere else in ITR2?
Thanks for your advice.
Dear Peeyush,
1 – Yes, for FY 2016-17. But from FY 2017-18, the loss would be limited to Rs 2 Lakh only.
Read: Budget 2017-18 & important proposals..
2 – There is no need to declare it separately..you can include it in ‘income from house property’ calculation u/s 24 (interest payments on borrowed capital).
Read : Which ITR form to file Fy 2016-17 / AY 2017-18?
Hi Sreekanth Reddy,
This is Ramm. I have some doubts in declaring the home loan interest in Investment declaration for the FY 2017-18 since this is the first time i’m declaring for the home loan.
I bought a flat which is under construction and the possession of flat is next year April 2018. And i’m paying the EMI of 20000 per month. So could you please advise me how i can declare my home loan interest.
Dear Ramm,
Until you take possession of your house, kindly note that you can not claim tax benefits.
Hi Sreekanth,
Thanks for well drafted article !!!
I am owning 2 houses with Home loan in which one is on my native and its occupied by my parents and another one is on City where i am working but i am not residing in the second house as its too far from my office and its left for let out . Currently I am residing in rented house .
Am i eligible for both Second home loan benefits and along with HRA ?
Thanks in advance
Vinothkumar
Dear Vinothkumar,
Yes, you can claim both HRA & Tax benefits on home loan.
But as per budget 2017-18, the maximum loss you can claim under the head ‘income from house property’ is limited to Rs 2 Lakh only.
Read:
Budget 2017-18 & 15 key proposals.
List of income tax exemptions for FY 2017-18 or AY 2018-19
Thank you Sreekanth .
you mean whether 2 lakhs Tax benefit for each house loan interest or i can get Tax benefit only 2 lakhs for both house loan interest ?
Can i declare one house is self occupied and other one is let out property and along with HRA ?
Thanks in advance
Vinothkumar R
Dear Vinothkumar ..It’s Rs 2 Lakh for both houses put together..
Yes, you can declare..
Thanks Sreekanth
Hi Shrikanth,
H ave a query here, I have an homeloan for which I took loan in Jan 2013. I got possession of flat in Jan 2017. As this was my let out property, I took benefit of interest paid during 2016-2017 plus 1/5 of interest paid during 2012-2013, 2013-2014, 2014-2015, 2015-2016.
In Apr 2017, I shifted to this house and this became my self occupied property. Can I continue to take benefit of prior period interest in addition to interest paid during 2017-2018 subject to maximum of 2,00,000.
Also I plan to payout this loan in next 2 years, can I continue to claim benefit on remaining prior period interest after making complete payment?
Please advise.
Dear Manish,
Yes, you can claim but subject to max Rs 2 Lakh as rightly pointed out by you.
Once you may close the home loan, you can not claim tax benefits.
Hi Sreekanth,
I found this article adequately informative and details are explained in a very simple manner – thanks and keep it up!
Context: My current home loan (started Mar 2012) is ending Apr’17, never rented, took possession in Jan’16 and registry was done Oct’15. Didn’t claim any tax benefits so far (seems I have some scope here). I need to take another home loan for an apartment I’m buying to shift my parents in Indore, MP. Flat is ready to move-in so, I may take the possession within few months.
Queries: (1) If my heome loan is approved by Mar 31 ’17 but amount is disbursed in Apr’17, would it’s start date be considered in 2017-18 financial year? (2) What income tax benefits would I get for the new home loan for 2017-18? (3) If there’s any scope, what all benefits should I claim for the previous home loan ending Apr’17, in 2017-18?
Thanks in advance for your time and consultation.
Dear Jitendra,
1 – For tax benefits purpose, I believe disbursement date is considered..
2 – You can claim principal repayments of up to Rs 1.5 Lakh u/s 80c and up to Rs 2 Lakh (for both properties put together) u/s 24 (as loss under the head ‘income from house property’).
Read: Latest income tax deductions for FY 2017-18 (AY 2018-19)
3 – If you are eligible to claim PPI then the respective year installment can be claimed along with the above mentioned benefits (subject to ceiling limit).
Hi
I had taken home loan for my second house (under construction) in August 2011 and disbursements are still happening as per milestones. The builder was supposed to give possession in Dec 2015 but looks like it’ll now be by June 2018. Will I be able to claim interest deduction on the home loan? My EMIs are quite high so I’m worried! Would be great if you could clarify this
Thanks
Kshama
Dear Kshama ..When would be your last loan disbursal date?
I believe that you can claim tax benefits as the total loan amount has not been disbursed yet.
Hi Sreekanth,
Thanks for such a detailed and useful article!
I took homeloan on 2 Aug 2011. As per 5 year timeperiod to claim the tax benefit- 5 years end on 31 March 2017.
My Builder is offering possession in 2nd week of April 2017.
Does this mean I can only claim 30K deduction instead of 2Lakh due to delay of 2 weeks…? is there any work around so that I can claim 2L benefit
Dear kapil,
When was the last disbursal (loan installment) received?
Sir please solve my query. I have purchased a house property (Home) from a builder. And instead of financing it from outside banks or finance companies, I avail the facility given by builders itself of purchasing it on EMI basis. Now please tell me whether such loan and interest paid to builder is eligible for deduction.
Dear Arun ..I believe you can claim the tax benefits.
But, you may have to maintain the proofs of payment and also your builder may have to issue statement of transactions that you are paying EMIs to them.
I purchased a flat in Jan’2008 in Faridabad against bank financing . I have still not received the possession of the house . The possession is likely in May’2016. I have paid interest to the bank to the tune of 21 lacs so far right since Jan’2008 .
I have paid Principal of Rs . 0.44 Lacs and interest of 2.14 lacs in the current financial year.
Please let me know if I can claim full deduction of Rs. 6.24 lacs , which is 2.14 paid last year + equated interest expenses over 5 years 4.2 lacs / year , My family is insisting me to sell the house now . Need your help to understand whether I should hold my property or it’s advisable to sell it.
Dear Agnivesha,
You can claim up to Rs 30,000 only as tax deduction.
Sell or hold – You are the best person to decide.
Hi Sreekanth,
Thanks for such a detailed and useful article!
I am having a query regarding tax benefit on PPI. I had taken home loan on May 2012 and possession of my house on Feb 2013. I come to know about the tax benefit on PPI, after reading this article. Is it mandatory to claim only 1/5 of PPI ? Can I claim 1/2 of total PPI this year and 1/2 next year? Please advice how can I take full benefit of PPI.
Dear Shripad,
The PPI installments of previous years can not be claimed now.
Thanks Sreekanth.. having the same sort of query in mind!!! Thanks for clarification.
And yes.. very helpful article!!! +1 for it!!!
I wanted to take a property to build a house on the same in the name of my mother only. However home loan is to be taken on my name with mother as co applicant. EMIs will be paid by me as my mother is a house wife.
I wanted to know that is it possible for me to take deductions of interest and principal under income tax act when I am paying the EMIs but property is in the name of my mother.
Dear Gourav,
As you are not an owner or a co-owner of the property, you can not claim tax benefits.
I Have taken possession of my 1st house in 2016 april and claimed pre emi intestest (20% or one fifth) for the current year.
Since the laws have changed with ceiling of Rs 2 lacs from next FY.. will i can claim the pre emi tax deduction more than 2 lacs in next FY.
regards
Dear naudy..I dont think so it is allowed from next FY.
I have taken home loan on April 2016 for construction purpose, does the principal component of EMI paid during the construction period is available for deduction u/s 80c ?
No, dear Pawan ..
But sec. 80c of income tax says When you pay a home loan EMI, there are two major components to it; the principal and the interest. Under section 80C you can claim tax benefits on the principal paid in the same year. You can also claim benefits of interest under section 24 under 5 equal installment after construction is completed.
Dear Pawan,
Principal component paid after taking possession of your property can be claimed u/s 80c.
However Prior period interest installments and regular interest payments (subject to ceiling limit) can be claimed u/s 24.
Dear Srikanth garu,
I have taken home loan on sep-2015. From sep-15 to Mar-16 I have paid 36000/- Interest. 27/3/16 I have submitted completion certificate and also started Paying EMI. For FY 16-17 total interest 165000/- and Principal is 37000/- are paying. Can I claim total Pre construction interest (36000/-) in this year or I have to claim only 1/5 th?
Dear Sreenivasulu,
You could have claimed PPI (entire) + regular interest (subject to ceiling limit, if any) in FY 2015-16 or AY 2016-17 itself, as the home loan disbursal date and CC (assuming you have taken possession FY 2015-16 only) have been issued in same FY.
Dear Sreekanth Reddy,
Thank you so much for your blogs and responses that provide lot of info. on tax matters.
One question on the Pre-construction period which has been changed from 3 years to 5 years effective from 1st April, 2017.
I took a home loan in July 2014, flat still under construction and so the 3 year pre-construction period will end in March 2018.
Will the new rule of 5 year pre-construction period be applicable to my case? If my flat completion is delayed further can my pre-construction period continue up to March 2020?
Yes, applicable dear Dinesh..
Sir,
I have booked a flat under construction in sept 2010.The bank issued me a loan of 30 lakh in oct-2010 and started deducting EMI from nov-2010.Bank officals told that you can start claiming tax benefit.Bank issued me interest certificates and I claimed it in return.Now I got the flat in Aug-2016.Now I understood after going through your article that I should not have claimed tax benefit earlier.Now what shall I do? Please Suggest
Dear Ranu,
Kindly consult a Chartered Accountant and take advice.
I have borrowed home loan from SBI MAX GAIN IN NOV 2012 and construction will be completed by march 2017. Can I claim 20% of PPI from AY 2017-18 onward subject to CEILING OF Rs. 2 Lacks as Tax Rebate from gross Income please.
Dear Sukhvir,
Yes, you can claim..
Can we allow 20 % Income tax rebate at source for House loan interest portion of previous year when house was under construction and rebate was not given ?
Dear Harish,
Do you mean to say that 1/5 th of PPI has not been claimed ?
If so, no, can not claim it in this FY.
Dear Sir,
I have registered a House in Oct – 2016 and submitted mutation document in Jan 2017. I occupied House since Oct- 2016 But Bank started PEMI from Oct- 2016 till Jan 2017 till received mutation document. So, Kindly clear it, am i eligible to Section 24 B for PEMI amount for FY- 2016-2017 ?
Regards,
Dear Abhi ..If you have taken the possession of the property, you can claim tax benefits u/s 24 for FY 2016-17.
hi mr. sreekanth.i have booked a flat in JANUARY 2015.which is under construction.i have taken a home loan from HDFC in february 2015 and now (2017 feb),i have transferred my housing loan to SBI. so my query IS THERE ANY PROBLEM IN INCOME TAX RETURN AFTER THE POSSESSION OF MY PROPERTY SINCE I HAD LOAN FROM HDFC EARLIER?
kindly respond soon.
Dear Vidhu,
There should not be any problem 🙂
I would like to know how to claim benifit towards interest paid on Home load under section 24. While filling ITR 1 form, i did not find any section in deductions head… Please help me asap ?
Dear Gaurav,
You need to calculate ‘income from house property’ and in that section one of the entry/deduction is Section 24, which is interest on borrowed capital.
Suggested articles;
Income from house property & tax benefits.
Budget 2017 & Restriction on Loss from house property.
I have taken home loan in March 2009 . The last disbursal of loan is also done in July 2011. I got possession in March 2015. I had started claiming regular ineterst paid to the bank since FY 2014-15 ? Was I supposed to claim 20 % of PPI from financial year 2014-15 ?
If so then what should I do now ? Please advise.
Regards ,
Saheb
Dear Saheb,
Three year from FY 11-12, is till FY 14-15.
So, you could have claimed the respective installments over the last two FYs.
You may claim 4th installment in this AY 2017-18 (subject to ceiling limit).
Dear Sir,
Thank you very much for your kind and promt answer.
Since, I had missed to claim the 20 % of PPIs for last two years, can I apply for correction of return of at least last financial year’s ITR 2 to claim the same.
With Best regards,
Saheb Basu
Dear Saheb,
You may do so, if your ITR has not yet been processed/assessed.
Dear Sir,
I had taken home loan in March 2009 for a flat in a cooperative society. The last disbursal of loan was on 31st March 2011 but the same got deposited in my account in the first week of April 2011.
I didn’t yet claim the full loan sanctioned amount from the bank. I took possession of my flat in 15th March 2015 and did registration in Dec 2016 . Can I claim the regular interest and 20 % PPI from FY 2016/17 ?
If not then can I claim registration fees from the left over loan sanctioned amount from the bank so that final disbursement would fall in 2017 enabling me to become eligible for claiming PPIs from this year ?
Please advise.
Regards,
Dear Bidita,
The last disbursal has happening in 2011 itself right, so how can you get again final disbursement in 2017? Bit confused with your query.
Please advise whether part pre-paymnet of housing loan eligible for deduction u/s 80C (principal amount) ??
Regards,
kishore
No, can be claimed dear Mohan..
Hi Sreekanth,
I have taken home loan in 2010 and got the final possession in 2017. The last disbursal of loan is also done in 2017.
Can I claim interest paid to bank from 2010 to March 2016 as pre-construction period. My point is that since last disbursal was in 2017, I can claim entire interest paid from 2010 to 2016 as pre-construction period.
Regards,
Ajay
Dear Ajay,
Yes, you can claim.
Dear Sreekanth, following are the details of acquistition of my second house under construction.
1. Loan sanction date : 28/05/2016 2)expected interest till 31/03/2017: 271911 3)principle = 0
expected completion date : 1st week of march 2017, (talked to bulider now, he confirmed, he will be able to give completion certification on or before 10th march 2017)
can i claim interest paid under sec 24 in this FY? it is my second house, deemed to be rented, not yet let out for rent (construction completes in mar 2017 only)
will the completion of construction is sufficient, or is it mandatory to get occupancy certificate also?
Regards
Dear sreedhar ,
To claim deduction it is essential that the acquisition (possession) is obtained or construction of the residential property is completed.
You can claim the tax benefits for AY 2017-18.
Dear Sreekanth,
I have got the possession of my home in Mar-2015 and I was paying EMI ( interest + principal ) starting 2011.
Can I get tax exemption on the interest paid before the possession ?
Thanks,
Regards
OP
Dear OP,
I believe that you can not claim the PPI installments now.
Thanks for the useful information.
I got my housing loan sanctioned on 26/04/2010 and got possession on 10/09/2012. I was not aware of the fact that interest during construction phase can be claim in equal installments after possession. Can I claim deduction in this year (that will be @4.5 years after possession)? Thanks!
Regards,
Pawan
Dear Pawan ..I believe this year you can claim the final installment (FY 2016-17).
Dear Pawan,
Yes, you can claim the installment (PPI) for AY 2017-18.
Hi sreekanth,
Please let me know if am i eligeible for house loan tax benefit this FY
Home loan sanctioned jan 2016
Got CC from builder in july 2016
Paying only Pre EMI (April 2016 to March 2017) = 247000
Principal repayment is zero till now
EMI not yet started but have CC (Independent house construction completed and occupied)
Please let me know if i can show 247000 this FY? or how much i can declare?
Regards,
kishore
Dear kishore,
Jan 16 to Mar 16 is PPI, you can claim 1/5th of this from AY 2017-18 tax filing onwards.
The interest payment done in FY 16-17, can also be claimed (subject to ceiling limit, if it is a self-occupied property).
Kindly read: Income from house property & tax benefits.
When you say that pre emi tax benifit can be claimed for underconstructed property acquired within 5 years.
Then this 5 years is fiscal year or exact 5 years from the date of purchase.
For example loan date june 2011 till possession date april 2016 will it be considered as less than 5 years
0r more than 5 years if we consider it as 6th fiscal year.
kindly advice
Dear naudy,
Kindly note that tax benefit will available if the acquisition is completed within five years from the end of the financial year in which capital was borrowed instead of three years.
Sir,
Thanks for explaining the Itax 24 b clause in very clear and simple terms.
Please answer my query
I took loan in 2010 and final installment of loan was disbursed in 2012. My flat is still under construction and hope to receive acquisition in March 2017. Can i claim any tax benefit on my loan.
You have very rightly pointed that while buying property it is better to pay more for nearly built up and claim tax exemption instead of waiting and loosing on tax besides tension.
thanks and regards
Dear Manoj,
The new clause of ‘5 year’ can be applicable in your case and hence you can claim tax benefits from AY 2017-18 onwards.
Consolidated question
Date of Loan Disbursal : 12Dec2010
Date of Project completion: 13Jun2016
Property let out on : 01Jan2017
Interest paid in FY17: 400000
Interest paid between FY11 – FY16: 2500000
How much deduction can I claim while filing returns for year ending March 2017.
One of us claims HRA and the other does not. What can be the deduction for each of us.?
Also current city of residence (rented premises) is same as the location of the property rented out. Would that be an issue for claiming HRA benefit and deduction for the interest on home loan ?
Dear Vishesh,
I believe you can claim 1/5th of PPI + entire interest payment done in FY16-17 (let out property).
The extent of tax benefit that can be claimed depends on the ownership share in the property (by default 50:50 can be claimed).
As this is a let-out property, can claim HRA.
Hi Friend..Thanks for the detailed explanation and answering each and everyone very quickly.
Pre EMI Starteed July 2015
House to be received July 2017
I have been paying Pre EMI including Principal. So I got a statement from bank on the split of Interest and principal I have paid during 2016-2017. Can I submit that under 80C and Section 24 like a regular loan. You have explained clearly that until the posession is done, home loan cant be claimed. In this case, I have paid principal too in the Pre EMI category. Not just Interest alone. Can you help me understand if I can still claim it or submit.
Dear Partha,
As the possession is not yet taken, you can not claim tax benefits.
Kindly note that principal portion paid during ‘under-construction’ stage can not be claimed.
Hi
My home loan pre EMI started in Jul 2012, I got the apartment possession on Aug 2016. Since it has been 4 years , can I claim the interest benefit for my home loan (20% each year)
I asked this question as it’s mentioned that this amendment is effective from April 2017
2) If not, can I claim Rs30,000 this year and full amount & 20% of pre-EMI from 2012-to Mar 2016 next year onwards ?
New Provision (effective AY 2017-18) :
In view of the fact that housing projects often take longer time for completion, it is proposed that clause (b) of section 24 be amended to provide that the Deduction under the said provision on account of Interest paid on Home Loan for acquisition or construction of a self-occupied house property shall be available if the acquisition or construction is completed within FIVE years from the end of the financial year in which capital was borrowed.
This amendment will take effect from 1st day of April, 2017 and will, accordingly apply in relation to assessment year 2017-2018 and subsequent years.
Dear Arun,
The amendment refers to AY 2017-18.
I believe that you can claim 1st installment of PPI + regular interest payment from AY 201-18.
Hi
I got my home started in Jul-2012, I got my flat possession in Aug-2016. As per the new provision of 5 years from date of construction, is it applicable for this FY 2016-2017 ? you have mentioned assessment year 2017-2018 which is FY 2016-2017. But not sure as its also mentioned effective from April 2017
1. If I can’t claim this year i.e FY 2016-2017, can I claim at least Rs30000/- for interest payment
2. Claim full amount (within Rs 2 lacs limit) from next year towards EMI interest – due to new rule
3. Claim 20% of Pre-EMI interest starting from 2012 till Mar-2016 -due to new rule
4. Or since I got the possession already, new rule is not applicable for me
Arun
Dear Sreekanth,
Many thanks for writing this, its really a great help for many people.
I’m having a query on my second home loan. I’ve purchased the flat in 2014 and received possession in Dec 2016.
my first flat is occupied by me and My second flat is still vacant and planning to give on rent.
For getting tax benefit on interest part of second home loan, i need to add it as income, so my queries are
1. how to calculate the rent to add as income as my flat is still vacant
2. on how much amount i can get rebate as possession received in Dec 2016
Thanks in advance,
Deepak
Dear Deepak,
1 – You can consider NIL rental income if it is vacant for the entire FY.
2 – You can claim one installment of PPI + entire interest payment in FY 2016-17 as tax rebate u/s 24.
Kindly read : income from house property & tax benefits.
Thanks a lot Sreekanth, it helps me a lot. Still struggling to calculate DLOP Notional value per month, as my flat will be vacant for next few months as well and without adding my second home as DLOP im not able to get tax benefit on interest.
Thanks for your response again.
-Deepak
Dear Sreekanth
I have taken home loan in Apr 2014. I will be getting possession certificate in Feb 2017. Does the below rule of 3 yrs apply only to self-occupied property? What about property that is rented out, is there any duration limit? Also can you confirm that I have time till Mar 2018 according to the rule for 3 years to complete.
“Existing rule : To claim tax benefits on home loan of a Self-occupied Property, the construction has to be completed within 3 years from the end of the Financial Year in which the capital (home loan) borrowed.”
Dear Noel,
In your case, if you get possession of the property in FY 2016-17, you can claim tax benefits along with PPI installment.
hello,
Thanks for such important information.Please guide..
Suppose i took a took a loan for a flat.The building is still under construction but my flat is almost ready.Will i be able to get the tax benefits of section 24 & 80 C, both?
Dear Richa ..No, till the time you get Possession certificate..
I have purchased under construction flat at kalyan , for that flat I had taken loan of Rs 1200000/- from bank , my EMI amount is Rs 17500/- per month that I repay to Bank from Jan-15. Can I able to take income tax benefit on interest amount.
Dear ASMITA ..Have you taken possession of the house or is it still under-construction?
If PC has been issued, you can claim tax benefits.
Hi Sreekanth,
I have taken a loan in December 2015 and took possession in Jan 2016. however, as the registration was not complete, i continued on pre-EMI till august 2016. Can i claim my pre-EMI in this case as a block or do i need to divide it in 5 years?
Thanks
Santoh
Dear Santosh…How can it be possible to get possession certificate in your name without the Registration being done?
Hi Sreekanth,
I understand that for self occupied PPI divided by 5 can be claimed for 5 consecutive years. However, I also learnt from someone that for let out property, you can claim the PPI in one go.
Eg: if your PPI is 5 lakhs and the rent received is 1 Lk / year, you can claim 5L – 1L = 4L as interest exemption in the same year. The 2Lk limit does not apply in this case.
Question: Is the above guidance I received true / correct / accurate?
Dear Ankur,
I believe that PPI clause remain same but the ceiling limit to claim regular interest payments is not applicable in case of Let-out property.
Kindly read: Income from house property & tax benefits on home loan.
Hi sreekanth,
I am paying the Pre-EMI and EMI has not started . I took house loan when half of the construction is complete
My loan amount is 20lakhs
Interest rate is 9.5
Last disburment happend in july 2016 after submitting the CC to bank.
Bank staff told my EMI will start in feb 2017 but In my provisional interest certificatate it is stated
Total interest paid/payable april 2016- march 2017 = 255000
Total principal paid/payable april 2016- march 2017 = 0
This Jan 23 is the last date for submission of proof to my employer . I have this interest certificate and Completion Certificate.
Can i avail tax benefit in this year? please clarify
Regards,
kishore
Dear Kishore,
As per the clause, the home loan should have been sanctioned by the financial institution between 1st April 2016 to 31st March 2017.
You home loan was sanctioned in FY 2015-16?
“First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.
The home loan should have been sanctioned in FY 2016-17.
Loan amount should be less than Rs 35 Lakh.
The value of the house should not be more than Rs 50 Lakh &
The home buyer should not have any other existing residential house in his name.”
Hi Sreekanth,
I need clarification on “Interest on Housing Loan – Additional Exemption (Section 80EE) : ”
I have taken the house loan for the first time, Loan amount 20lakhs, Loan taken 29th jan 2016, currently my EMI is not started , i am paying only the interest, Last disbursment happpened in july 2016 after i submitted the completion certificate. I asked my bank they told my EMI will start from feb 2017.
Total interest paid/payable April 2016- March 2017 : 255000
Total principal paid/payable April 2016- March 2017 : 0
Can i avail the tax benefit under “Interest on Housing Loan – Additional Exemption (Section 80EE) : “? what proof i need to submit ?
Regards,
kishore
Hi Sreekanth,
The possession of the property for which I have taken a home loan (4 years back) is not yet happened. Can I take benefit under 80C for the principal amount paid against home loan? Possession is expected in early 2018.
Thanks
Kapil
Dear Kapil ..Until you get the possession, you can not claim tax benefits on home loan.
Hello Srikanth,
I had taken a flat under-construction as below
Date of purchase : Feb. 2010
Date of 1st loan installment disbursal : Aug 2010 (total loan sanctioned 2000K)
Date of last home loan disbursal : SEP 2012
There after I changed the lender to Axis bank got additional loan sanctioned ( total for 2500K and Final demand note by builder was disbursed on Aug 2016 and possession in sept2016.
Currently the property is vacant not rented also
Please let me know what deductions can I show for FY 16 _ 17
Thanks
Chandrashekar
Dear Chandrashekar,
Last disbursal happened in FY 2012-13, so to claim construction has to be completed and get the possession within 3 years ie by FY 15-16 (Mar 16).
So, you may claim tax deduction of only up to Rs 30,000.
Hi,
In case of joint loan where both party want 50% share in tax rebate, how the interest is calculated for PPI. Will it be 50% of (1/5th of PPI + Current year Int) or something else.
Dear Ajay,
Yes, it 50% of the tax deductions (PPI / EMIs).
Hi Sreekanth,Happy New Year, I have taken the home loan of Rs.38Lks in October-16. Extra Paid stamp Duty,Tax etc. EMI started 25k from Nov-16. My Flat possession date is Nov-17. Could you please let me know what can i claim now and what can i claim in Next financial year. I went to my office fin. dept. so they told me submit all documents after possession of flat & u can not claim until possession. That means next year in IT return. Could you please guide me.
Thanks in Advance.
Dear Neeraj,
Happy new year too you too 🙂
As the possession in happening in next FY 17-18, you can not claim Stamp duty etc and also tax benefits in this FY 16-17.
You can claim PPI (1/5th ) for the interest paid from Nov16 to mar 17 and also regular interest payments made during FY 17-18, when you file your income tax return in June/july 2018.
Read:
Income from house property & tax benefits on home loan.
Dear Sreekanth Reddy
Thanks for a well written article and wishing you a very happy new year!
Below is my query:
New Provision (effective AY 2017-18) :
In view of the fact that housing projects often take longer time for completion, it is proposed that clause (b) of section 24 be amended to provide that the Deduction under the said provision on account of Interest paid on Home Loan for acquisition or construction of a self-occupied house property shall be available if the acquisition or construction is completed within FIVE years from the end of the financial year in which capital was borrowed.
Query: Does the above have any impact, if I rent out the under construction property ( or declare as deemed rented out) or will you I continue to enjoy tax concession for 100% of APPI and post construction Interest (post adjusting with the rent received). Pls let me know.
Dear Ravi,
Happy new year wishes to you too 🙂
How can you let-out a property which is still in under-construction stage?
Hi Sreekanth,
I have taken home loan of 20lakhs in jan 2016 . My EMI is 21000 , Bank disburesed amount in stages Every month starting from feb 2016 i get a due to pay the interest only. But i set sanding instruction to debit 21000. so every month i am paying 21000 On Sep 2016 i submitted the construction complention certificate then bank disbured the final amount. but till now i get due to pay only interest ,
Then today i asked bank to provide interest certificate ,
It is stated that from March 2016 -Dec 2016 interest paid is 155000, (avg is around 155000/9 =17000 per month)
from Jan 2017-March 2017 (provisional) Interest to be paid is 91000 (avg is around 91000/3 = 30000 per month)
No amount is adjusted toward principal repayment.
Could you please help me how i can show this to avail tax benefit.
I also dont understand how come (provisional) Interest to be paid is 91000 and how it is calculated? When i asked bank manger he just simply replied it is system generated we dont do anything
Another staff told my regualar EMI starts from feb 2017.
It is confusing me now how to show this in tax declaration. could you please me ?
Regards,
kishore
Dear kishore,
May I know your Loan tenure and current applicable rate of interest . When did the last disbursement happened?
You can request for Amortization schedule from your banker, in which you can identify interest & principal components of your EMIs easily.
Hi Sreekanth,
I had purchased the flat in October 2015 & loan for the was borrowed in November 2015. EMI against loan started from January 2016 but due to some reason i haven’t yet received the possession of the flat. Can you please let me know if i can avail tax benefit.
Dear Harshad..No, as the possession is not yet given.
Hi Sreekanth,
I have my home loan approved on November, 2015 and from that month I have paid pre-EMI of 9 months which is over July, 2016.
From August, 2016 I am paying my full EMI. And i got the possession of my flat on December,2016.
Till date, the apartment building is not fully ready but the builder completed the work of my flat for me to enter.
Please tell me what taxes can be claimed for FY 2016-2017.
Dear Shubhamoy,
Nov 2015 till Mar 2016 is PPI which can be claimed in 5 equal installments.
So, 1/5th of this + regular interest payment done in FY 2016-17 (april 16 to mar 17) can be claimed (subject to ceiling limit).
Read: Income from house property & tax benefits on home loan.
Thank you Sreekanth for the reply.
I do not have occupancy certificate as-of-now since building is not fully completed and neither electricity bill as the building is running in a temporary electricity connection. What other documents do I need to submit to claim home loan tax benefit.
Regards,
Shubhamoy
Dear Shubhamoy,
If you have not got OC/PC then you can not claim tax benefits as of now.
Hi Sreekanth,
Can a letter from the builder regarding the possession be shown for the claim?
Regards,
Shubhamoy
Dear Shubhamoy ..No. Kindly read : What is Possession Certificate / OC?
Hi Sreekanth,
I purchased a flat (First time buyer) (Construction property) in March 2016 and possession will be on Jan 2017. EMI paid till now is 1,60,000/- (Apr 2016 – till now). Am I eligible for tax benefit? If so, under which column and how amount am I eligible?
Dear Santosh,
Yes, you can claim the interest payments (part of your EMIs) made from Apr 16 to Mar 17 under section 24 in your income tax return form.
The principal portion of your EMIs can be claimed under section 80c.
Kindly note that if the property is a self-occupied one then max Rs 2 Lakh can be claimed u/s 24.
Read: Income from house property & tax benefits on home loan.
Hi srikant,
I purchased a house in greater noida.
Booked in March 2010,loan amount 14L,
Emi started in Oct 2010,got possession in jan2016 and registry in June 2016.till date no tax benefit received.
Can u help me how do I calculate tax benefit in this fy
Dear Mr Mishra,
As the construction period is more than 3 years , you can claim max up to Rs 30,000 as tax benefit.
Thanks dear srikant for your quick response.
My problem is from when do I get home loan rebate benefit.
Date of possession jan2016 or date of registry of property june 2016.
Different FYs
Dear Mishra…Its from the FY in which you get the possession, you can claim tax benefit.
Hi Sreekant,
I have purchased a flat in Pune.Registery done in Sep2016 .
Property is under-construction now. Wil get possesion next year.
I had taken loan of 30L akh in this financial yr in Nov2016.
Please correct me if my understanding is wrong.
1) I CAN’T get tax rebate on interest this year.
2) I CAN claim stamp duty registeration charges under section 80C.
3)I CAN get Principal amount rebate under section 80c this year
4)What about 50K under 80EE, can i claim for that now?
Please correct/clarify.
Thanks,
Rakesh Patil
Dear Rakesh,
1 – Correct.
2 – No (as the possession is in next FY).
3 – No. Principal repayment made during the PPI period is not eligible for tax deduction.
4 – I believe that deduction u/s 80EE can be claimed, provided if the below criteria is met;
First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.
The home loan should have been sanctioned in FY 2016-17.
Loan amount should be less than Rs 35 Lakh.
The value of the house should not be more than Rs 50 Lakh &
The home buyer should not have any other existing residential house in his name.
(The law is silent on the point that whether this Section is applicable to already constructed houses or under-construction house. In the absence of any specific instruction, it is always assumed that it is applicable to everyone i.e. it is applicable to all types of houses.
Hi Sreekanth, As you mentioned that we can claim interest exemption for 5 years construction period from next financial year (presently it is 3 years). I got possession in April 2016. I have paid interest INR 30k in 2012-13, 10k in 2013-14, 40k in 2014-15, 1.9 Lacs in 2015-16 & 1.5 Lacs in 2016-17.
Please guide how should I proceed in claiming exemption. I have given you real figures.
Dear shekhar,
You may kindly calculate the PPI as given in the above article and claim 1/5 th of PPI + Regular interest payments from Assessment year 2017-18 onwards.
Hi Sreekanth,
Great article, please can you confirm my understanding for the deductions I will claim on this basis
Loan Started – Oct 2015
Possession happening now in Jan 2017
So Prior Period Interest (PPI) = Oct 2015 to Mar 2016 – approx. 1 lacs
AY 2017-18 Interest (Apr 2016 – Mar 2017) is approx. 3 lacs (as it will be let out and it doesn’t have the 2 lacs limit)
Above this I am paying rent while it was in construction in same city (Mumbai) – so I’m claiming HRA from Apr 2016 – Mar 2017
Hope my understanding is correct for claiming deduction for both interests (1 – PPI from Oct 2015-Mar 2016, 2 – current year interest of more than 2 lacs as its let out) and HRA for full financial year
Dear Vivek,
Yes, you understanding is correct.
1/5th of PPI can be claimed along with regular EMI interest payments from AY 2017-18 onwards.
Hi Sreekanth,
I purchased a flat (First time buyer) (Construction property) in May 2016. I obtain an OC certificate and possession will be on Mar 2018. EMI paid till now is 2,50,000/- (June 2016 – till now). Am I eligible for tax benefit? If so, under which column and how amount am I eligible? Also I paid stamp duty and registration fee which is 3lac. Thanks in Advance.
Thanks,
Shrikant
Dear Shrikant,
As the possession of your property has not yet happened, you can not claim tax benefits on home loan.
Dear Sreekanth,
I have taken a joint home loan with my spouse (wife) for purchase of flat in June 2015. She is first applicant in the home loan. Flat is still under construction. My spouse , being house wife, I will be paying the total cost of the house. House also will be registered jointly as both of us as owners without any mention of our share in the property . Is there any guideline/rule which states that minimum % shall be mentioned in registered documents ? Now what would be income tax benefits for the housing loan taken ? The house will be put on rent. How the rent received from the house can be shared between me and my spouse in case % share in not mentioned in registered /sale deed document?
awaiting a reply.
regards
Satish
Dear satish,
By default the ownership ratio is considered in the ratio of 50:50, if no specific ratio has been mentioned. So, in the same ratio, both of you can claim tax benefits.
Rental income can be shown equally in your tax returns.
Dear Sreekant
I have purchased a flat in Mohali jointly with my wife and got home loan from bank for Rs 40 lakh in July 2016. The bank has given me 18 months waive off of EMI and charging only interest for the payment being made to Developer. Payments are being made to developer since July 2016 as per construction linked plan. My queries are as:
1. Can I claim Tax benefit on the interest being paid for period between July 2016 to March 2017 .
2. Possession of the property would be handed over on Dec 2018. Please suggest if I & my wife can claim tax benefit for pre- possession period.
3. Please also let me know what per cent amount should be claim for Tax benefit
Thanks & Regards
Dear Alkesh,
1 – No.
2 – If possession is to happen in FY 2018-19, then you can claim Prior period interest + regular interest from AY 2019-20 only.
3 – By default the ratio would be 50:50, if the ownership ratio is not mentioned in the Sale deed.
Hi Sreekanth,
Please find below my scenario and help me.
Flat bought date: October, 2015
Loan borrowed date: Feb, 2016
Pre EMI interest paid from March 2016 to June 2016
Actual EMI start date: July 2016
Possession date: March 2017
Till Feb 2017 end I will be staying in rented house.
In march I will obtain possession letter and will start living in my new home.
In this scenario can I claim all the below things for tax benefit?
1. Interest paid from April 2016 to March 2017
2. Total Principal paid during FY 2016-2017
3. HRA paid from April 2016 to Feb 2017.
4. Interest paid in the month of March 2016 (amount/5).
We (I & my wife) have taken a joint loan. She was the primary applicant. If I take provisional certificate from bank then it will be on her name as loan account is linked with her saving account. She doesn’t have any income and only I am repaying the home loan back. In this case is it ok to submit provisional certificate which is on her name?
Can we claim both hra & principal paid in the same financial year? Hra paid from april 2016 to feb 2017 and principal paid from april 2016 to march 2017. Possession will be in march 2017. Pls clarify.
Dear Raghuveer ,
In this scenario,
PPI is for FEB & Mar 2016 which can be claimed in 5 equal installments.
For FY 2016-17, I believe you can claim 1/5 th of installment + Regular EMIs (subject to any ceiling limit).
If you are going to live in the same house then you cant claim both HRA & tax benefits.
However, if you are going to live in rented house only then can claim both.
But if the house you bought and the house you live in are in the same city, you should have a genuine reason for not living in the house that you own. The reasons could be that the house you own is too far from your workplace, or the commute is very difficult.
You may need to provide these explanations to your employer, or the income tax authority in case there is a scrutiny of the details that you have provided.
Thanks Sreekanth. I will be taking possession by 1st March 2017. In this case why can’t I claim HRA (from April 16 – Feb-17) and actual principle & interest paid during FY 2016-17? Can u pls clarify?
Hi Sreekanth,
I want to buy plot in a residential colony and get house constructed on the same. However, bank has initially approved only plot loan and have asked me to apply separately for construction. They say that both loans will be merged later. Also, I meet all the requirements for tax rebate on interest under Section 80EE.
1) Can I claim tax rebate for only plot under 80 EE ?
2) If above answer is NO, then does that mean – when I claim for rebate under 80 EE after the construction loan gets approved, can I include the interest I paid during “only plot loan” duration?
3) If it takes say 6 months to get the construction loan approved, then can I consider these 6 months interest for PPI calculation?
Dear Mahima,
1 – No.
2 & 3 – I believe that no tax benefit can be claimed for the period before completion, unlike a home loan where interest charged during the under-construction period can be claimed in five years, post completion, subject to the overall limit.
Hi Sreekanth,
Does that mean for the case “when we buy plot and get construction done”, we can claim tax rebate for interest amount only after the completion of construction. No claim possible later, for the before construction period at all?
Why government discourages this concept of getting our own house constructed on a plot – by making such taxation rules? Isn’t this unfair?
Hi Sreekanth,
I took loan for under construction house in FEB 2016. In November 2016 construction got completed. But we started paying EMI from Feb 2016 that comes under PEMI. but the Actual EMI started from Dec 1st.
How i can show pre construction EMI details while submitting proofs. 1.) Can i Show the amount from Feb 2016 in current financial year.
2) Can i show registration and stamp duty as well(registration done in Feb2016).
Dear Sravani,
Feb & March is your PPI which can be claimed under 5 equal installments.
So 1/5 th of PPI + regular interest payments (subject to ceiling limit) can be claimed in AY 2017-18 onwards.
As the possession is happening in a different year than the registration year (FY), you may not be able to claim the registration expenses.
Hi Sreekanth, Thank you for your response.
Ex: My Loan started from Feb 2016. The flat is in construction till Nov. Is Feb 16 to Nov 2016 EMI also come under PPI or only Feb 2016 and Mar 16?
Can I show Apr.2016 to Nov 2016(which is still in construction period) EMI in current financial year?
Dear Sravani,
Yes you can claim in current FY.
Again thank you for your reply.
I heard there is a additional tax benefit for first time home buyer. Can you please give more info on it. Under which section i can get additional tax benefit?
For this current FY 2016-2017 I am paying (paid + Payable) 1,70,000 Interest. How 1) can i show additional tax benefit of 50K.
2) can I show 16k interest of Feb and Mar 2016 (PPI) under additional Housing Loan Interest?
Dear Sravani,
This is a new proposal which has been made in Budget 2016-17. First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.
The home loan should have been sanctioned in FY 2016-17.
Loan amount should be less than Rs 35 Lakh.
The value of the house should not be more than Rs 50 Lakh &
The home buyer should not have any other existing residential house in his name.
Hello,
I bought an under construction home in September this year. I understand EMI can be shown only after i get occupation certificate. 1) Can i show registration and stamp duty this financial year and under which section ? 2) As a first time buyer how much can i claim under sec 24 B and 80EE ?
Dear Rohit,
1 – Stamp duty & registration fees can be claimed under Section 80C provided you get the possession in this Financial Year.
2 – If it is self-occupied property then Rs 2 Lakh under Section 24 & if it is Let-out then there is not threshold limit.
First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.
The home loan should have been sanctioned in FY 2016-17.
Loan amount should be less than Rs 35 Lakh.
The value of the house should not be more than Rs 50 Lakh &
The home buyer should not have any other existing residential house in his name.
Kindly read: Income from house property & income tax implications!
Hi Sreekanth,
I purchased a flat (First time buyer) (Construction property) in April 2016. I obtain an OC certificate and possession will be on Dec 2017. EMI paid till now is 1,50,000/- (Apr 2016 – till now). Am I eligible for tax benefit? If so, under which column and how amount am I eligible? Thanks in Advance.
Thanks,
Anish
Dear Anish ..If you are going to get the possession in Dec 2017, you can not claim tax benefits for FY 2016-17 (or AY 2017-18).
Thanks Sreekanth for your reply. I read below information form one article can you please clarify. Finance Act, 2016 has introduced deduction of interest payable on housing loan for first time home buyers taken from any financial institution over and above the deduction allowed under section 24b. Section 80EE has been amended for this purpose.
The deduction is allowed only to individuals, maximum limit of deduction is Rs. 50,000 and deduction is available from financial year 2016-17 onwards.
Dear Anish,
If you have taken loan in FY 2016-17, you can claim extra Rs 50,000 u/s 80EE as tax deduction (subject to meeting the said conditions).
Hi Sreekanth
In March 2016 I purchased a ready to move flat in Bengaluru & by the time I got my registration & moved in it was September 2016. The loan was fully disbursed in June 2016. The interest for the full year is Rs. 310,000
While claiming tax benefit, will it be considered from Sep16 to Mar17 or will the full year interest be considered?
I am not worried about the principle amount as my PF & insurance
Thanx & Regds … Deepak Kamath
Dear Deepak ..You can claim full year interest (subject to Rs 2 Lakh ceiling limit if the property is Self-occupied).
Read:
Self-occupied property & tax implications.
Income from house property & tax implications.
Hi I got loan sactioned for property in May 2011…..I have got possession in April 2016…
1. can I claim 2 lacs interest for the ay 17-18 or 30k
2. additionally can I claim 20% of the total interest paid in the last few years for next 5 yrs
Dear naudy,
I believe you can do so from AY 2017-18, as the time-period has been increased to 5 years.
Hi Sreekanth,
I have availed loan on September -2016 for under construction home wherein registration(stamp duty, registry) has happened in the same month. Please let me know if I am eligible for tax exemption right from September month?
Dear sanjay ..If you are getting the possession of the property then YES you can claim tax benefits from AY 2017-18 onwards.
Dear Sir,
I Have booked an under construction flat in Sep-2011, Recently my builder has offered me the fit-out of the flat, but OC is not yet available and it is intimated that OC will take nearly 6-8 months (i.e. next FY). In view of this can I claim EMI interest part benefit in 5 equal installment as Fit-Out is already offered to me.
Regards,
Dear Nits,
If you do not get the possession of the property then you can not claim tax benefits.
Thanks Sreekanth for the reply….
I would like to clarify that I have paid to builder & will be shifting in next month but dont have OC available right now. As per builder they have applied for it.
Can I Claim tax rebate on EMI interest part from this financial year onwards.
Regards,
Dear Nits ..If so, you can claim the tax benefits. But do follow it up with your builder to get OC soon.
Hello sir,
I booked flat in 2009 Delhi NCR which is till under construction and for same not able to claim interest part for tax exemption as till date possession not received. Where as i bought one another flat in august2015 in joint with wife and first holder is wife and we got possession for same in july, 16 and we are living in this house. Now can we claim expemtion for old house also. How exemption to be counted. ?
Dear GAURAV,
As the possession of the property (first one) has not yet given, you can not claim tax exemption.
On the second one, you can claim the tax benefits.
Hello Sreekanth,
Thanks for sharing the useful information. I have a question related to my second home. I repaid my first loan. I took the second home loan where first applicant is my wife. The loan is taken for under construction property on Oct 2014. I am going to get handover on Jan 2017. How can I get tax benefit and what needs to be taken care? I am not going to stay in this new property so do I need to show this as let out property from Feb 2017 to get full interest as tax benefit?
Dear Vikas,
Yes, you can show it as let-out and can claim the entire interest (regular) + 1/5th of Prior period interest paid in 2014, 2015 & 2016 (till march) as tax deduction u/s 24.
Read: Income from house property & tax benefits on home loan.
Hello Sreekanth,
Thanks for your response. Is it good enough to show only 2 months rent (Feb 2017 and March 2017) without any other supported document to claim full year interest or do I need to submit any document for same that I am getting rent only for 2 months? Can you please update us about Wealth Tax.. what is that and do we need to pay the same for second home? Sorry for extended question..
Dear Vikas,
Yes, you can claim the tax benefit. There is no need to submit any proofs when you are filing your ITR.
Wealth tax has now been abolished 🙂
Hi Sreekanth,
Thanks for all the help and valuable suggestions you are providing to all of us!!!!
My query is : I have booked a Flat which is under construction. My House Loan EMI Started from April 2016. I will get my possession & registration by Nov 2016.
Can I claim all money paid in EMI (Principal & Interest – April’16 – March’17) in the Income Tax benefit? If yes which catogary I can claim?
Thanks in Advance.
Regards,
Ranjan Thakur
Dear Ranjan,
Yes you can claim. Principal repayment u/s 80c and interest payments u/s 24.
Read: Income from house property & tax benefits.
Hello srikanth,
I had purchased an under construction flat, by taking a home loan from Idbi bank in 2010, the first and last disbursements happened in 2010 and 2012. Due to the delay from builder I got possession in 2016sept, due to the cost escalation and increasing loan amount I went for a balance transfer to axis bank and the last payment to builder was made in sept 2016 from Axis Bank.
The flat is vacant and not let out.
Please let me know the IT BENIFIT I can claim for such a case
Thanks
Shekar
Dear Shekar ..I believe that you can claim the tax benefits from AY 2017-18 onwards.
Do check with a CA too.
For a property under construction, can home loan principal repayment be claimed under section 80-C on the basis of bank home loan statement of EMI?
Is it admissible for deduction under 80-C?
Dear Tushar ..No.
Dear Sir, I have one doubt, actually Govt. give subsidy on 1st time Home Purchase of Rs. 50000 which is in interest on Home loan. But I taken Home loan in IIFL but no benefit i get still a date even i purchase 1st time Home. so give me guidance what i do and what is the legal procedure to get benefit of this scheme.????
Dear Rakesh,
There is some confusion as to whether Section 80EE is applicable only on home loans taken from Banks or not.
Did you check with IIFL regarding this tax benefit?
Dear Sreekanth Reddy garu,
I have booked a flat in Mumbai in June 2012 and my first EMI started from July 2012. Now the housing project is completed and got Occupancy Certificate 0n 13/08/2016. Will I get income tax interest rebate benefits as the project is completed more than 3 yeats. Please help and advice me, Sir.
with regards
D. pandurangaiah
Dear Pandurangaiah ..I believe that the new proposal is applicable in your case and you can claim tax benefits from AY 2017-18.
New proposal is applicable in my case means… please explain me, Sir.
Dear Pandurangaiah ..I was referring to increase of ‘three years duration clause to five years’. Kindly read the points given under ‘Latest news : Budget 2016-17’ section in the above article.
Hi,
Can i claim IT benefit from 2 home loans ?
Dear Bdas ..Yes.
Hi Sreekanth
I had taken home loan on Aug 2016 and registered the propery , this is my second home loan and will I get tax benefit on 2016/17 for second home loan interest part, if my house construction get complete in 2016/17 financial year
Thanks
Varghese
Dear varghese ..Yes, you can claim. IF you get the possession of the property in FY 2016-17 then you can claim tax benefits when filing your taxes for AY 2017-18.
Hi Sreekanth
Just want to confirm about second home benefit as income tax law had changed for FY17/18.
Is that I can get benefit for my first home loan and second home loan ,
2 lacs for first home loan (Principal and Interest)
2 lacs for second home loan(Only interest or PreEMI)
Not sure how did the clause “Remaining loss can be offset for next 8 years ” will work out
Thanks
Vibin
Dear varghese,
Both put together the limit is up to Rs 2 Lakh only.
Kindly read : IT Deductions for FY 2017-18
I booked a flat in a project in mid 2009. In April 2010, home loan EMI started. The project got delayed and it is complete now, August 2016. I havn’t taken the home loan benefits till date, neither on principal, nor interest. Please advice, how can I avail tax break on home loan. Also, is it good to close the loan account now, since I got some money to do it ? If I close the loan now, can I still get the home loan benefits, if any ?
Dear Alok,
I believe that you can claim tax deductions of up to Rs 30,000 only from AY 2017-18 onwards.
If you close home loan, you can not claim tax benefits.
Great point and a big learning for me !
Let me explain my case, I booked a property in June 2013, got home loan sanctioned for 20 lacs. Home loan EMI started from August 2013. Now the possession is expected somewhere in July-August 2017.
I made multiple part payments in between and now only 10 instalments of 19500 are remaining for my loan amount. Clearly my loan would get over before I get the possession of flat.
Interest Paid so far :
FY 2013-14:
Interest Component: 1,13,657
PRE EMI Interest: 11,680
Simple Interest on Pre Payment: 1179
FY 2014-15
Interest Component: 1,06,062
FY 2015-16
Interest Component: 68,123
Simple interest on pre-payment: 1102
FY 2016-17 (till date)
Interest Component: 16,911
Could you please help me with below queries:
1.) Based on your comments above, to get the tax benefits on interest paid so far, I need to keep the loan alive. This means I need to get the conversion done for smaller instalments and increase in loan period?
2.) Also if I can get tax rebate on 1/5th of interest paid till March-2017, do I need to keep loan alive for 5 more years starting FY 18, i.e. till FY 2021-22 ?
3.) Clearly If I sell this property anywhere before 2022 I will not be able to get complete tax deduction on interest amount?
4.) What if I am not in India for any financial year during above mentioned period and I don’t have any taxable salary in India, I will just miss the 1/5th of interest tax deduction, specifically for that year?
5.) Both Property and home loan are on my name as I was not married then. Can I get my wife’s name added (she is also working and pay taxes) to the property and home loan so that she can get the tax benefit as well? Or she can just get the tax benefit for interest paid in later period after getting her added?
Thanks so much again for clearing many doubts !
Dear Tarun,
1 – Yes (to claim tax benefits).
2 – Yes.
3 – Yes.
4 – Yes (depends on your Residential Status too).
5 – As you are sole owner of the property and you have paid the EMIs till now, so only you can claim the tax benefits. Once she is a co-owner & co-borrower then she can claim tax benefits for the later period. (Kindly check this out with a CA too).
Thanks for the response Sreekanth, this is really going to help a lot. Somehow I didn’t get email notification on your response, just checked it randomly and found your comment. 🙂
Thanks again !
Dear Tarun ..Kindly note that you have not selected the option ‘replies to my comments’ alert when submitting your comment, hence you have not received the email-alert when I replied to your query.
Hi , great work Shreekant.
I have a query related to the five year tenure for under construction properties under section 24. Will this clause be applicable to all those who purchased property prior to AY 2017-18? Would appreciate a confirmation on this please..
Dear Swapnil ..I believe it is applicable.
Hi sir,
I decided to buy a under construction flat to be possessed by Dec 2018. Currently I have a personal loan of 17000/- EMI which is 6 month older. I need a home loan of 38 lakhs. But because of the high emi of the personal loan my eligibility for home loan is only 32lakhs. I don’t have money to close the PL, but I can do balance transfer to other BANK and reduce the emi by increasing the tenure but only after 12 months.
Now my question is
Since BANK release fund to builder in phased manner, shall I go ahead n book the home loan of 32lakhs now and as I told you after 6 month when my PL ‘ll b 12months older I can reduce the EMI to let say 10-12k, hence my home eligibility increases. In this scenario ‘ll BANK provide me additional amount required after 6 months of first disbursement.
Please reply.
Dear Tapas ..May or may not (Banks may look at long track payment record, your income etc and then decide about your loan eligibility).. Suggest you to not overstretch your finances.
Read : What are Top up loans? Personal Loans Vs Top up loans.
hii Rajneesh,
all query’s resolution was given wonderfull and in explanatory way.
my query is as follows
I had taken home loan of Rs 15 laks for property A and it is self occupied means i m living in that. and paying 16 K EMI from last 5 yrs. the intrested paid in this FY is appx 1.3 lakha annumn.
Now i want to take property B with home loan amnt appx 13-14 laks for 20 yrs.which is ready to shift but want to give on rent.
was it help to save my income tax which is now a days appx more than 1 laks annual
Dear Praveen,
You may declare the second property as Let-out and claim the interest payments (if they are more than the interest payments on first home loan) u/s 24.
But kindly note that TAX SAVING should not be the sole criteria to make an investment. Kindly review your financial goals and then take decision.
Read:
The 6 most common personal finance mistakes..
Calculation of income from house property..
Hello Sir,
Thanks a lot sir for clearing the doubts i read all your articles.Some doubts are clear some are still pending sir i took underconstruction property in may 2015 got the loan in may 2015 and possession in 2016 as my loan started in may 2015 itself that mean i have to show interest from may 2015 to march 2016 under head income of house property in negative figure i.eRs. 120796/-no need for any pre construction interest in 5installment if i am wrong please correct me.Secondly what about principal amount whether i have to take from may 2015 to dec 2015 underconstruction or jan2016-marc 2016 i.e after possession or i have to show all principal amount i.e may 2015 to march 2016.
Dear Samina,
If your loan starting year and possession year are same (as in your case), you can claim both Under-construction period interest (total) and regular interest payments (after possession) also under section24.
Principal amount after taking the possession can be claimed.
Hello Sir,
Thanks a lot for clearing all my doubts.
Hi Sreekanth,
Was filing my ITR so came across this link. Most of the questions asked in this forum seem relevant to my queries, and being answered in a crisp yet clear manner.
Let me explain my scenario
I took a house loan in Aug 2013, and got house possession in June 2015. However, due to interiors etc., I did not move in to the house till Mar 2016.
Now for this financial year, house interest paid is less than 2 lakhs incase I do not claim Pre construction period interest component (1/5th). However, if I include it, total exceeds 2 lakh.
First, should I show as Self occupied or let out, as most part of the year, it was not occupied at all.
Second, I live in non-metro city. Going forward, can I claim both HRA and house loan interest benefit, living in rented accommodation, and letting it out, since this place is far away from my office location.
Thanks!
Dear Abhay,
May I know the current status of your property? Has it been let-out?
Hello Shreekant,
I booked an under construction property having total value around 47 lakh.
I am planning to start home loan from August, 2016.
I would like to know about the benefit in income tax if I choose the loan amount less than 35 lakh. is this benefit is only for this financial year??
Dear Narender,
I believe that you are referring to Section 80EE.
First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.
The home loan should have been sanctioned in FY 2016-17.
Loan amount should be less than Rs 35 Lakh.
The value of the house should not be more than Rs 50 Lakh &
The home buyer should not have any other existing residential house in his name.
You can claim the benefit till your loan is active status.
Hi Sreekanth
I learnt that there is new section 80EE added in 2016-2017 for first time home buyers. It says deduction of 50000.
Can you please explain a little on this, is this 50000 calculated based on total interest. Eg. If I pay interest of 245000 then under Sec 24 I get 2,00,000 & under 80EE I get 45000 ?
Or is it like I get extra 50000 irrespective of the amount of interest paid. Also is this deduction allowed till end of the home loan payment ?
Thanks in advance
JJ
Dear JJ,
First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.
The home loan should have been sanctioned in FY 2016-17.
Loan amount should be less than Rs 35 Lakh.
The value of the house should not be more than Rs 50 Lakh &
The home buyer should not have any other existing residential house in his name.
Kindly note that this incentive of Rs 50,000 would be over and above the tax deduction of Rs. 2,00,000 under Section 24 and Rs. 1,50,000 under Section 80C. The benefit of this deduction would be available till the time the repayment of the loan continues. This Deduction would be available from Financial Year 2016-17 onwards (ie AY 2017-18).
So, If you pay interest of 245000 then under Sec 24 you can claim Rs 2,00,000 & under 80EE Rs 45000.
Hi,
Can section 80 EE deduction be claimed only after possession of the property. Section 80 EE is silent on this clause. Further deduction u/s 80 C for repayment of loan seems not linked to possession of the property and deduction can be claimed immediately on paying principal amount. Pl suggest
Dear Manoj,
I believe that tax benefits under sections 80c/24 can not be claimed for under-construction property. Yes, the law is silent on Section 80EE, so we can assume that if the said conditions (u.s 80EE) are met, an assessee can claim deduction u/s 80EE irrespective of whether the house is under-construction of completed
Kindly go through this useful link, click here..
(Clause (xviii) stated above suggests that any payment (including principal repayment of housing loan) for the purpose of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property” can be considered for tax benefit under Section 80C.
In other words, for consideration under Section 80C, the property should be capable of generating income (real or notional) which is chargeable under the head “Income from house property.” Section 22 and 23 of the Income Tax Act present the introduction to income from house property and determination of the annual value of a house property.
When a house property is under construction, there is no likelihood of income, and hence under Section 80C there is no provision for tax rebate on account of principal repayment. Only in the year in which the construction is completed can the principal repayment be considered for tax benefit.)
Thanks for update
Dear Sreekanth,
I am a Govt. servant and filing return for the FY 2015-16.
I am referred to your website about home loan tax rebate and found it quite explanatory and useful.
However in my particular case I need some clarification and your expert guidance to know the limit u/s 24.
I’ve taken a Home loan in Dec 2011 under the construction linked plan for construction of a new home in Greater Noida (Part of National Capital Region but otherwise falls in UP Municipal corporation range).
(1) The first installment of the loan from the Financier bank was disbursed in Dec 2011 and the last installment was disbursed in Jan 2013.
(2) The property is in my name and I got possession of the house in Nov 2015 after registry in the same month.
(3) Although I took the possession of the new house but it has not been used by me by the reason of the fact owing to my employment, carried on at New Delhi and I have to reside at Govt. provided Quarter in New Delhi only. The house is still lying vacant.
Now I am little confused and worried about my tax rebate limit u/s 24 (Rs. 2 Lakh or 30000/-?) and got two queries, boggling in my mind:
(1) Should my house falls under the category, ‘Not Self Occupied Property’, so that I would avail max rebate limit of Rs. 2 Lakh u/s 24.
(2) Should my case fall in ‘Construction completed within 3 years’? (Counting from end of the FY 2012-13 of last loan installment disbursal, i.e. Jan 2013) so that I could avail max rebate limit of Rs. 2 Lakh u/s 24.
Please clarify the limit in my case and suggest (if possible) so that I can avail maximum tax rebate limit u/s 24 and avoid huge loss.
Thanks
VKJ
Dear VKJ,
There are mixed opinions on whether to consider the first loan disbursal date or the last installment date.
I believe that you can consider the last disbursement date which falls in FY 2012-13 and if so, you are eligible to claim PPI + regular interest payments as tax deduction from AY 2016-17.
If you can consider the house as ‘let-out property’ kept vacant, you can claim 1/5 th of PPI + regular interest payments of FY 2015-16 (no ceiling limit).
In case if you would like to declare it as Self-occupied property then maximum limit is Rs 2 Lakh.
Dear Sreekanthji,
Please let me know where should I indicate in the income tax return the rent received by me on “Let out” property while also claiming deduction of interest of over Rs 2 lakhs on home loan.
Kindly advice
Rajeev Ranjan
Dear Rajeev,
You need to calculate ‘income from house property’ and provide this amount in ITR form. (in ITR -1, it is under total income part b).
Kindly read: Income from house property & tax benefits on home loan.
Hi Sreekanth,
I bought an under-construction property in February 2012 with my dad as both co-owner and co-borrower. EMI started soon after first disbursement in February 2012. The possession was given to us in November 2015.
1. Since the possession is after 3 financial years from purchase (Feb 2012) , am assuming am eligible only for 30000 interest benefit fir current assessment year (15-16). Please advise.
2. As my dad is co-owner and co-borrower, can he also claim 30000 as interest benefit in his taxes? Or is the amount based on ratio of ownership? Where is the ratio documented?
3. How can I claim all the interest I have paid till date on this property?
Dear Satish,
1 – Yes.
2 – Ideally 50 : 50 ratio is to be considered if ownership ratio has not been mentioned in the sale deed.
3 – Not eligible to claim.
Hi,
I received the possession certificate in March 2016. My house has been lying vacant since then. For my ITR this year, should i treat my house as ‘vacant’? I will claim interest and pre-construction interest this year on my home loan, which started in October 2012.
Basically, will I get a benefit for INR2,00,000 or actual under section 24b, depending on the status (vacant or not) of my house.
Regards,
S.Ghosh
Dear Mr Ghosh,
It depends on how you are going to declare your house as ; either self occupied property or let-out property vacant for 1 month in FY 2015-16.
You can claim 1st installment of PPI (2012 to Feb 2016) + Regular interest payment for Mar 2016, subject to overall aggregate limit (if you disclose it as SOP).
Hi
I understand PPI is considered for the period prior to previous year in which property is acquired and constructed. If so then in this case PPI will be from 2012 to Mar 2015 (and not upto Feb2016) and interest can be claimed for full period Apr 2015 to Mar 2016 plus PPI instalment. Pl advice.
Dear Manoj..Yes, you are right and I stand corrected.
If the possession of the property is in Mar 2016 then prior period is till MAR 2015.
I purchased a ready to move in property the loan of which started in Feb 16 itself. I did not have enough funds to get the registry done so i did not pay the full amount. On July 16 all the pending payments were done and the flat was registered and the possession was taken.
I am filing IT returns for AY 2016-17 and came across this article.
Will the period from Feb 16 to July 16 be considered same as under construction property?
If yes will this mean I will not be eligible for any deductions for AY 2016-17 on the Interest paid ?
Dear Abhinav,
1 – Feb & March can be considered for PPI.
2 – You can claim tax benefits from AY 2017-18. 1/5th (1st installment of feb +Mar) + regular EMI interest payments (subject to aggregate limit, if any).
Thank you Sreekanth !!
You have been a great help 🙂
Hey Sreekanth, Quick question. I took a home loan which was under construction. The loan was sanctioned in Aug 2011 but loan amount was paid to the builder by the bank in construction plan installments. Bank paid the last installment to the builder in April 2013. Due to delay in construction of building, I got possession of apartment in Aug 2015.
My query is that whether I can avail pre-construction Interest which I paid from Aug-2011 to April-2015 in 5 equal installments.
Dear RP…I believe you can claim the PPI installment along with regular interest payments from AY 2016-17.
Hello,
Thank you for all this info.
However I do have a query related to stamp duty and registration charges.
I bought an under construction flat in FEB FY 15-16 but yet to get the possession. Can i claim tax exemption for stamp duty and registration fees for FY 15-16.
Hi Sreekanth,
I Start construction of my house in Jan 2015 and took loan in April 2015, the house is still under constriction. till march 2016 i was repay 90% of loan. my query is. can I take interest & Principal benefit
Dear omkar ..As the property is still under-construction, you can not claim tax benefits.
Hi I am Indian and have very recently migrated to USA. Can i claim tax deduction on pre-EMI for FY 15-16 in my Indian Salary Income for tax filing purposes. Chances of me using the tax break after the registration are minimal as I wont have any income to take advantage of
Dear BKJ..If the property is still under-construction then one can not claim the tax benefits.
Dear Sreekanth
You are doing a wonderful service for the community.
I have a question:
1. I am current in house #A. I had earlier taken home loan for the same (2004) and have cleared it now.
2. I have bought a second house #B in 2005 and I have rented out the same. Have Housing Loan and I am paying Rs 35K as EMI
3. Now I have bought a flat #C. Took loan in two instalments – 25L on 30/01/2013 and 10L on 28/03/2015. I am also paying 36K as EMI. Possession of flat will be given to me in May 2016. I am getting interiors done and will move there in Oct 16.
My Questions?
1. Can I change my self-occupied property from #A to #C? Can we avail self-occupied property tax exemptions for different houses in different time periods?
2. Can I avail tax exemption for interest payed for FY2015-16 (AY17) for my Flat#C? Or do I have to wait till AY18? Please clarify.
Dear Raghav,
1 – If a property is Self-occupied for part of the year and Let-out for part of the year, then income from such House Property shall be calculated for the WHOLE YEAR as DEEMED LET-OUT PROPERTY only.
2 – You can claim tax benefits from AY 2017-18.
Thanks so much Sreekanth. You have been a great knowledge house. God bless!
Hi Srikanth..
Thanks for the clarification you are providing.
I want to claim 1/5 th of the interest paid against home loan during pre pocession period and my income is from salary. WHich ITR to use ?? Please advise
Dear Rammohan,
Have you taken the possession of the house? You can claim the interest payments u/s 24 while calculating the income from house property.
Which ITR form? – It depends on other sources of income too.
Kindly read:
Income from house property & tax benefits.
Which ITR form to file?
Hi Sreekanth,
My house construction started in May 2015 and loan taken in the same month. Construction completed by October 2015 and occupied the house from November 2015. Bank given provisional interest certificate with interest which I paid Rs 108160 as pre-construction interest.
Nov 2015 to Mar 2016, interest receivable is Rs 122097.
My company allowed me to mention a total of 143729 = 122097 + 21632 ( 1/5th of PEMI paid).
As per your article, I can claim whole PEMI Rs 108160/- . If yes, please let me know how I can claim in ITR1 returns. In which section I need to mention.
Again, is it max interest cap claiming is Rs 200000/- ?
If no, I can claim remaining Rs 86528 ( means 108160-21632).
If yes, I can 200000-143729 = 56271
Please suggest.
Dear Naresh,
In your case the loan taken FY and possession date falls in the same Financial year, so you can claim total prior period interest + Regular interest payments subject to max Rs 2 Lakh (if property is self-occupied).
You need to calculate the ‘income from house property’ and then show it in your ITR.
Kindly read: Income from house property & income tax benefits on home loan.
Hi Sreekanth,
I have taken possession of a house on March 27, 2016. I started paying home loan EMI from October 2012. My interest on home loan for FY 2015-2016 was more than Rs. 2.00 lakhs. My PPI upto March 2015 is Rs. 6,70,000. Now I understand that I can claim 2 lakh deduction for FY 2015-2016. In order to claim the PPI also for tax deduction, can I list my house property as Let Out instead of Self Occupied?
Dear Renju ..Are you occupying the property now?
Yes
Dear Renju ..If you have self-occupied the property then max you can claim is up to Rs 2 Lakh only.
Hi Sreekanth,
Thank you for the information article.
I have purchased under construction property on 1st July 2015 and have also taken loan in July 2015. The EMIs started from July 2015 itself. The flat / building is still under construction. I leave ( Rented Apartment ) in Mumbai and the property is located in Mira road ( Thane ) which is outside of Mumbai Munciple Corporation.
From you article, what I have understood is that I can not claim the Rs 2,00,000 Home Loan Interest.
But my employer considered the Home Loan Interest, Principle and Stamp Duty / Registration while Preparing my Form 16.
Now I am in confusion whether I need to pay tax on that 200000 ( I am in 20% bracket ) or prepare the ITR as per Form 16 provided by employer.
Please advise.
Thanks,
Dipraj
My apologies for typing mistakes, had posted the query from a mobile device.
Dear Dipraj,
Suggest you not to consider the tax benefit of Rs 2 Lakh and then calculate your tax liability. Accordingly prepare your tax return and then file.
Hi,
Thanks for writing this interesting blog and providing lot of valuable information.
I shall be grateful if you can help me with one query:
I have taken an under-construction property in Dec 2011. I got home loan sanctioned in June 2012 however since I paid 50% amount upfront, 1st disbursement of loan was done only in March 2013. Also, the registry of the house was done in November 2013. I got possession in June 2016.
Can you please guide me:
1) How to calculate “the date from which capital was borrowed” here ?
2) In which AY shall I claim the IT rebate?
Regards
Dear Anshul,
1 – You can consider the date of last disbursement (loan amount).
2 – AY 2017-18 (FY 2016-17).
Thanks.
I confirmed with one CA and CFP today. he told me that it has to the date on either registry was done or 1st disbursement was done, that is what is considered as loan start date and we need to consider that as financial year (in my case it is 2012-2013) and count 5 years from there so my 5 years till I can utilize tax benifit is March 2018.
Nonetheless, Thanks for your inputs.
Dear Anshul,
Kindly note that the law does not explicitly state which year should be considered as the year of loan borrowal if the loan is taken across installments spread over more than one financial year.
There are arguments favoring ‘last loan disbursal date’ too.. Since the loan can be said to have been fully disbursed only after the last installment, one could consider the year of the last installment as the loan disbursal year for the purpose of tax calculation.
Dear Sir
I purchased a under construction flat in December 2014. Also I took a home loan of Rs 1 cr in the same month.
I got possession in month of Feb 2016 and let out the property for month of March 2016.
My prior period interest (for Dec 2014 to Mar 2015) is Rs 160,000.
My questions are as under –
a) For FY 15-16, since property was let out I understand I can claim the entire interest paid on loan during 15-16 as deduction. Is it correct?
b) I can also claim 160,000/5 = 32,000 deduction for prior period interest. Pls. confirm
c) Lastly, what shall be the annual value for my house for computation of income from house property. It was let out for only one month (for balance 11 months it cannot be said as vacant as it was under construction and possession was not there).
Further, had I not have let out the property and kept it vacant would I have been eligible to claim entire interest on loan as deduction? I stay in another city and this is my first house property. OR I would have been subjected to 200,000 limit as it may be considered as not staying because of profession in some other city.
Also what proof I need to show towards fact that I had actually let out the property to some tenant?
Thanks
nikhil
Dear Nikhil,
a – Yes.
b – Yes.
c – One month rental income can be shown for FY 2015-16.
Rental agreement can be considered as a proof. Also, your tenant might claim HRA and disclose your PAN too (landlord’s PAN number).
Read:
Income from house property & income tax benefits on home loan.
IT declaration & Investment proofs.
Hey Sreekanth
Thanks for the reply.
Just reiterating one more question – if I do not let out my property and keep it vacant in this case, will I still be eligible for entire loan interest deduction OR I will fall under 200,000 max limit?
Here my owned apartment is in a different city where I do not stay.
thanks
Dear Nikhil ..In that case too, you can treat as Let-out property kept vacant..
shared opinions/advises are very useful and is appreciated a lot
Dear Sreekanth
I took a home loan of Rs 28 lacs for an apartment which was under construction. The loan was sanctioned in Aug 2011 but loan amount was paid to the builder by the bank in construction plan installments. Due to delay in construction of building, i got possession of apartment in Mar 2016. Bank paid the last installment to the builder in Jan 2016. Presently the flat is on rent since May 2016.
Interest paid by me till date:
2011-12: 72000
2012-13: 233000
2013-14: 260000
2014-15: 254000
2015-16: 248000
My query is that whether i can avail Tax deduction of up to Rs 2 lacs or 2,48,000 for payment of interest on a housing loan in the financial year 2015-16 under Section 24 of the Income Tax act or am i entitled to the deduction of Rs. 30,000 only.
Dear Ravi,
As the loan’s last installment has been paid in Jan 2016, I believe that you can claim Prior period interest (1st installment) + regular interest amount in AY 2016-17 ITR.
Hi Sreekanth,
I am constructing a house in my own plot. I have taken a home loan for the same and have paid stamp duty to register the mortgage (land documents) in the name of the bank. The stamp duty was 14,000 and MOD charges of 5,100. Does any of these be claimed for tax benefit under 80C or any other sections?
Please advise
Dear Pradeep,
Stamp Duty and Registration Charges paid for residential house qualifies for deduction under section 80C, any expenses for paid residential plot / home loan documents registration etc., does not qualify for tax deduction under Section 80C.
Hello Sreekanth.
I have taken a home loan in 2012, and I have got the possession of my flat in May 2016.
Now when I file IT Return in in July 2016, Can I claim my previous years interest in the return I am going to fill in 2015-2016 financial year? OR since I got the possession in Apil 2016, I can claim the interest in next financial year’s IT Return ?…Please suggesa
Dear Priyanka,
You can claim the tax benefits in AY 2017-18 tax return ie FY 2016-17.
Sir, i took a home loan of Rs 20 lakhs for an apartment which was under construction. The loan was sanctioned in Dec 2010 but loan amount was paid to the builder by the bank in construction plan instalments Due to delay in construction of building , i got possession of apartment in June 2015. Presently I am staying in that apartmentt. My query is that whether i can avail Tax deduction of up to Rs 2 lacs for payment of interest on a housing loan in a financial year 2015-16 under Section 24 of the Income Tax act or am i entitled to the deduction of Rs. 30,000 only.
Dear sk sahoo..When was the last loan installment paid?
Dear Sreekanth Ji,
Thanks for sharing valuable information in systematic manner for the benefit of million people.
My Pre Construction Period Interest and come out with (A) Rs. 75000/- for claim
in next Five years starting whereas Interest claim for the Financial Year 2015-2016 is (B) Rs. 133000/- .
Please guide me how and where to fill (A) & (B) in ITR 2A.
Regards
Dear Kamlesh,
You have to calculate ‘income from house property’ & show it under the respective head in ITR. (For example ; in ITR -1 you can find this in Part B, Income from one house property).
You can deduct interest payments (regular & Prior period) as LOSS while calculating income from house property.
Kindly read : Income from house property & Income Tax implications.
Shrikant ji,
Thanks for response.
It’s second home loan which I am mentioning in Schedule HP and entering intrest 133000 of 2015-16.
Should I add 75000 and 133000 to mention as Loss OR there is seperate provision to mention pre construction intrest of rs 75000.
Also, pl tell me column of schedule HP of ITR 2A and as I hv to file THIS one.
Dear Kamlesh,
Yes, you can add both together and can deduct the LOSS.
You can disclose the income from house property in Row (2) of Part B- TI.
Calculation can be provided (both houses) under SCHEDULE HP.
I have taken a loan in nov 12 and still wating for possession of flat.
I have already crossed 3 year clause .
can I avail 2 lac internest amt rebate as per new rule where possession period increase from 3 to 5 year.
my expected possession is dec 16. can I show in this FY ?
Dear naveen ..You can show this from AY 2017-18 onwards.
Hello there!
Thanks for a great article and with a lot of examples it makes easy for readers to get a few doubts cleared. However, I have a simple query and not sure If I have overlooked.
I am working in an MNC and declaring following components:
-25000 Rent per Month (HRA)
-100000 LIC Policy
-Home Loan EMI 40000 (under construction)
Recently, I have bought an under construction flat and it is going to be over by end of next year.
Since flat is under construction and I see a column in Investment declaration that says “Loss on house…”. All other fields beneath it talks about “Interest”.
My question is can I claim both HRA and Home Loan (EMI) under “Loss on house…” category?
Thanks heaps
Dinesh
Dear Dinesh,
As of now you can claim HRA (till the time you get the possession of the property).
Kindly note that you can not claim tax benefits on home loan on an under-construction property.
Dear Sir,
One clarification please. Do we need to show the pre-construction interest paid in our ITR while filing ITR now when flat is under construction ?
Dear Subhash..No. One can claim tax benefits after taking the possession of the property.
Hello,
We dad is paying home loan interest from 3 years and also paying principal from last one year.
Till date we didn’t claim any tax benefits on it.
The house is in some society kind of construction, where they construct and then give the possession later
Can we claim for tax benefits this year FY16-17 (2015-2016)?
Please guide us in this.
Thanks
Suresh
Dear Suresh ..If you have not yet got the possession of the property then you can not claim tax benefits on home loan.
Dear Sreekanth Reddy,
Good morning, I have been paid interest of FY (Financial year)
2012-13- 73,000
2013-14- 65,000
2014-15- 59,000
2015-16- 54,000
I am doing job in private university.
I got possession in month of July 2015 of hoam loan.
I have been shown interest of 2015-16- 54,000 when i submit document of saving in the University.
Now I want to fill ITR in month of July 2016. How can I show previous interest (interest before possession).
I know add old interest and divided by 5 –
73,000+65,000+59,000= 197000/5=39,400 Rs.
I can show 39,400 Rs previous interest in up comming interest.
I want to tell you I do not show 39,400 Rs in FY-2015-16. I showed only interest of 2015-16- 54,000.
I want to know- How can I take benefit of 39,400 Rs in FY 2015-16. How can I filled in e-ITR form.
Help me.
Thanks
Dear Jitendra,
I am a bit unclear with your query.
You can add the installment along with the regular interest payment and deduct it as ‘LOSS’ while calculating the ‘income from house property‘.
hello sir,
i booked under construction flat , i paid stamp duty and register the flat in 22 march 2016, my loan sanctioned on 14 may 2016 and my EMI stared on may onward , my possession of flat will be on April 2017 ,
1) how and when i will get tax benefit
2) i am filling income tax return for financial year 2015-2016 so can i get tax benefit
on stamp duty
Regards,
Mahesh
Dear Mahesh,
1 – Tax benefits can be claimed once you get the possession of the property.
2 – No, as the possession has not yet happened.
Hi,
I had got the loan sanctioned for my apartment in Jul 2013 and incurred the following interest in the following years –
2013-2014 – 89,908
2014-2015 – 2,69,883
2015-2016 – 2,20686
I took the possession of my flat in Mar 2016
I’m going to be filing for my returns for 2015-16 by Jul 30th, 2016.
Can I claim the 2 lakh Interest exemption ?
I was also claiming the HRA for 2015-16. Can I go ahead and claim both since I had not moved in into the apt ?
Regards,
Shalini
Dear Shalini,
1 – Yes, if it is Self-occupied (if let-out, no ceiling limit).
2 – Yes, you can.
Thanks. Another question, the flat that I’ve bought and the place that I’m staying in is in the same city, very close by. The flat is currently empty. Can I still go ahead and declare it as self-occupied and claim the HRA and the Home home interest deduction upto 2lakhs ?
Dear Shalini,
If you declare it as SOP then you can not claim HRA but can claim the tax deduction on Principal & interest payments.
Hi Sreekanth,
Thanks for the quick response. I still have a doubt. I’ve read that if due to some valid reason, you’re not able to stay in your own house ( in my case the possession was taken only in March 2016 and my husband was out of the country for the complete year Apr 2015-Mar2016 ), you can still go ahead and claim the interest deduction and claim HRA also for the rented place.
Can you pls clarify if in this case, I can go ahead and claim both – HRA for the rent and deduction for the Interest.
Regards,
Shalini
Dear Shalini,
Yes, if you can justify then yes you can claim both.
Thanks a lot Sreekanth for your prompt response !
Regards,
Shalini
Hi, Thanks for this blog.
Doubts I have for Pre period interest concepts:
1. whats difference between completion date and possesion date of the property?, because accordingly, I have to think on 5 equal interests claim , or one-time interest claim while filing ITR now.
2- Also, Pre-period got over on 31st march-16. Then, while filing ITR now , how am I eligible for interests EMI which started after april-16. Because u mentioned, pre-period interest + current interest. I think I can claim onñly pre-period interest for filing ITR. I am filing ITR for 15-16 FY,so all interest should be within that range date.
Thanks for your help
Dear Raja,
1 – Read: What is OC & PC?
2 – The interest amounts of Apr 16 to Mar 17 have to be claimed in AY 2017-18 along with Prior period interest installment (subject to aggregate limit, if any).
When was your loan issued? What is the CC Or PC date?
HI ,
Thanks for rpely.
Loan issued: 8th Jan 2016.
Pre-period interest from 8th Jan to 31st March 2016 only.
Completion date: 10th March 2016
Possession date: 14th April 2016
So, My pre-period interest need to be claimed now as I am about to file ITR for previous finalncial year.
But I think i dont need to claim interest (EMI) from April 2016 to till now, as as per me, I should do in next year ITR filing.
Dear Raja,
If both, date of loan taken and occupation date / completion date had taken place in the same Financial year (as in your case), entire interest pertaining to pre-construction period can be claimed along with regular interest in the same assessment year. There is no need to claim the prior period interest in 5 installments.
Hi Sreekanth,
I purchased property and took loan in Jan 2013 (my first bank loan disbursement was in Jan’13 and agreement was in Nov 2012). The possession date is July 2016. It is more than 3 years from 31 March 2013 (FY 2014, FY 2015 and FY 2016).
In addition, I see one clause that ther period of 3 years wll get revised to 5 years from AY 2017-18. Now for claiming benifit, I’ll be filing for PY 2016-17 and AY will be 2017-18.
Can I claim benifit upto 2 Lakhs in this case?
Is new rule of AY 2017-18 applicable for me or it will be for new agreements/ registrations in the year 2016/17?
The construction of the property was done before March 2016. Shall I take completion certificate from builder as the clause says possession/ completion of construction?
Thanks in advance.
Dear pankaj,
Yes, based on the new provision you can claim from next AY.
Thank a lot Sreekanth.
Hellow.
I have a query i have taken a loan for a house property and the possession of the said property was received in 04/06/2016 and the principal component : 289408/- ( f.y : 2015-2016) and interest component : 803072/- would the following amount are eligible for deduction u/s 80c and section 24 (b)……..if not then why ?
Dear Nitin..Kindly read: Income from house property & income tax implications.
Hi Sreekant,
I would like your views on the tax implication for the below –
I booked a flat with a builder in Nov 2009 and got a home loan sanctioned for the same in Jan 2010. The home loan was a “”Construction Linked Plan”” loan with the first disbursement being made in Feb 2010 and the last disbursement in June 2012. I got possession of the flat in May 2016, and the registry done. The registry was done at a higher rate, as the circle rate was higher than the cost of flat(when booked). The difference in cost of flat and circle rate is 14 lacs. What would be the income tax implications on the above ? The said flat is still empty and woodwork is to be done, and will most probably be let out. The EMI for housing loan I have been paying since April 2010. What housing loan deductions can be claimed for the above ? And what would be the income tax liability on the difference in circle rate and cost of flat when booked ? Thanks in advance for the help.
Dear Sanjiv..I believe that you can claim up to Rs 30,000 as tax deductions.
There won’t be any tax implications as of now, unless you plan to sell it.
I took home loan sanctioned on 26th Oct 2010 and took first disbursement on 17th Jan 2011. Received possession of the flat on 25th March 2016. Will I be entitled for past interest waiver paid prior to possession as per the new guideline w.e.f. 1st April 2017 for 5 years period allowed from disbursement till possession? Kindly advice as if I will be getting only 30000 home loan interest waiver it will be of no use to keep the property and let our it on rent.
Dear Rupesh,
I believe that NO as your possession date is in last FY.
The new amendment is applicable for FY 2016-17 or AY 2017-18.
Dear Sreekanth,
We have a built a house and Started paying EMI of Rs 37,000 with 15 years term. Please suggest when on wards I can start pumping in additional Money to this loan account so that I will get full benefit on Income tax.
People say try partial payment till half period (7.5 years) later its of not much benefit ?
Dear Narayana,
If you have allocated / planned for sufficient savings towards your other high priority goals like Retirement, you can surely think of part-payments in the intitial years only.
If you repay after say 10 years, by that time most of the interest burden (interest portion of your home loan) would have already been borne by you.
Hello,
I have small query related to which ITR form I can fill.
I have salary income and received possession of flat in June 2015 which was let-out in Oct 2015.
In income tax site for AY16-17 for ITR1 form it is mentioned that “Income from One House Property (excluding cases where loss is brought forward from previous years)”, so here claiming Pre Construction amount in block of 5 year, will it be considered as “loss brought forward from previous years”. Will ITR1 still be applicable here
or do I need to fill some other ITR.
Please advice.
Thanks
Ankur
Dear Ankur,
In your case, you can file ITR -1 form.
Kindly read: Which ITR form to file?
We have two houses between me and my husband.
First house is Owned and loaned by him , so he claims all the loans in his Itax. Second house he is claiming 50%.
But i m not clear for me –
second house is first property in my name. Shall i fill in return as FIRST or as SECOND (will have to treat this as rented)
Please clarify
Dear shalini..Is the second property jointly owned by both of you? Or are you the only owner of the property?
Hi,
My query is how to claim the pre- possession interest paid to bank while filing ITR? under which head would you show/claim this? Would request you to kindly elaborate with example.
Dear Bhaskar,
It has to be included under the head ‘income from house property’. You can include it along with Section 24 while calculating the income (profit/loss) from your property.
Jointly owned
Thanks Sreekanth. Very well written in a laymans language. It was very useful.
Dear SR
I am very much impressed from your artical which is written in a very understandable language that the person who won’t have the commerce background could understand it very well .
In continuation with the pre emi my question is related to stamp duty and registration we paid can we take the tax benefit of the same in current financial year even though the property is underconstruction .
Thanks & Regards
Prof .Amar Pawade
Dear Prof Amar..I believe that one can not claim the tax benefits for an under-construction property.
For claiming deduction, one must possess the house also i.e. Payment for under-construction is not allowed. Both payment of expenses and possession of the house must be in the same fiscal year for claiming expenses.
I purchased a house in 2014 October.I have taken a home loan of 1300000 for that.I m residing there since December 2014.I m paying an EMI of rupees 12650 per month.How much tax benefit I can avail during a single financial year.
Dear Wasim..Kindly read: Income from house property & Income tax benefits on home loan.
I want to by buy second house in the name of my wife who is housewife and not earning anything to get the benefit of stamp duty available in the state. However, all payments for home loan will be done by me. Can I still claim the tax benefits applicable? Or Can I be joint owner of the flat with my wife being prime owner to claim tax benefit??
Dear manish..To claim tax benefits one needs to be owner/co-owner of the property.
Hi Sreekhanth,
I have taken an under construction property in Oct 2014, but my home loan has started in March 2016. My Possession date is in April 2017. Along with home loan i have availed home loan insurance. I am aware that i cannot add my home loan details for tax exemption untill i get possession. Could you please confirm if i can add the EMI of home loan insurance for tax exemption? If yes, should it be under which section?
Thanks
Dear Pradip,
You get tax benefits under Section 80C on home loan insurance payments.
Hi .. Have a query …
So I took a loan in July 2013 , Am mulling registration any day now . The interest outgo during the period July 2013 to March 31st 2016 is around 10 lakh Rs. This years I will also pay interest of more than Rs. 2 lakh. My question is this :
Post posssession and nregistration , how much tax can I claim , if the property , actually is neither self occupied , nor rented but vacant. Can I :
Claim Rs. 2 Lakh ( The pre construction period interest divided by 5 ) PLUS the 2 lakh for towards this year’s ineterest , making it equal to a four Lakh deduction OR Only Two Lakh ?
Dear VIKAS..Are you planning to keep it vacant for the entire Financial year (2016-17)?
Hi Shreekant,
My Scenario: I have booked under construction flat few weeks back at Pre-launch (May 2015) and possession is 4 years from now (Probably 2019 1st quarter).
Planning to take a home loan from SBI and I am confused if its best to start paying Pre-EMI from next month as per loan releases (as per construction stage) ? Its not clear if this Pre-EMI paid be considered for Tax benefits after possession ?
Please suggest best option for this scenario to avail max. Tax benefits and to also not burn my pockets.
Dear Anup,
My personal take is ‘as far as possible avoid buying under-construction properties’.
There won’t be any income tax benefits till the time you get the possession of the property.
Hi Sreekanth,
I and my wife (co-owner) booked a flat (property 1) in April 2010 and took home loan in April 2010 itself. Got the possession in April 2015. This property is vacant. I am also paying maintenance charges also.
In September 2011 we bought another flat (property 2, ready to move in) with home loan in September 2011. Got it registered in September 2011 hence claiming the tax rebate since then. This property is self occupied.
Clarification required on
1. Can we claim tax rebate for the property 1. If yes how.?
2.any tax benefit regarding maintenance charges I am paying.
3. Any tax benefit regarding the amount paid for registration of the property 1.
Many thanks in advance….
Dear Tarun,
1 – I believe you may declare it as a Let out property which is kept vacant for whole year and claim tax deductions. There won’t be any ceiling limit for tax deduction on interest payments u/s 24.
2 – You may not be eligible to claim maintenance charges as the property is vacant.
3 – The possession of the property & registration have to happen in the same fiscal year to claim the benefit.
HI Team, i have purchased an under constrution prpty in 2010 and the same year also got a loan of 33,5000. now i have been paying pre-emi till date. 90% is gone. i am getting the pre-emi changed to emi now, although i am late as i was not aware at all that it can be changed. cani start claiming the pre-emi interest along with emi interest from this year. pssession is still not done though and will be delayed for another year i guess. is there any clause that we have to take tax rebate for pre -emi within 5 years of loan sanctioned date and possession. in that case i will not get possesion wihtin 5 years as it will be extened by one more year. any advise how can iclaim pre-emi this year itself
Dear Sanjeet,
The maximum deduction that you can claim is up to Rs 30,000.
Hi Shreekanth,
I and my wife(she is also in service)( both co-owners & co-Borrowers) bought an under-construction flat and will soon register in May 2016. We applied for home loan of HDFC and got the loan sanctioned on 10 May, 2016. Our EMI will start from june 2016. We will take possession of the flat on June 2017 and at that time will obtain the possession letter from the builder. We both are first time home buyer, loan amount is 34.5 lakhs and cost of home is 43.5 lakhs.
Questions:
1) Can we claim deduction for the principal and interest amount paid (for the FY 2016-2017 or the AY 2017-2018)? If yes, to what extent (amount) the deduction on principal and interest will be available and from which period onwards?
2) Can we claim deduction for the registration amount paid in May 2016 (for the FY 2016-2017 or the AY 2017-2018)?
3) we both are in service,can we both get interest deductions upto Rs.200000 per head i.e.(200000 for me & 2000000 for my wife,thus total 200000+2000000=400000 in the financial year 2016-2017 or after possession?
4)if we are paying interest for under construction property,then this interest amount will be divided by 5 installments after possession,then its one installment will be added to the 200000 limit or not..?
4) Please guide me on the best way by which we can claim maximum possible deductions for the FY 2016-2017 or the AY 2017-2018?
Dear SHRIKRISHNA,
1 – As the possession is going to happen in FY 17-18, you can not claim tax benefits in AY 17-18 ITR (FY 2016-17).
2 – I believe that to claim this, the possession and registration have to happen in the same FY.
3 & 4 – After possession. You can claim PPI in 5 equal installments (subject to aggregate limits).
Read: Income from House property & Home Loan tax benefits.
5 – List of IT Deductions for AY 2017-18.
Hi Shreekanth,
I booked a property in September 2011. I took a loan by September 2012, which was approved on Nov 2012. I got “offer of possession and final demand from builder on Nov 2014 for possession of property by March 2015. I made all final payments as per their final demand, but they dint handover the flat yet as the external amenities got delayed and I’m getting handover next week only. But the land ( UDS ) was registered in my name by 2014 itself by the builder. If I get the handover next week ie. May 2016 ,then will I be eligible for IT exemption under 80 EE for the limit of Rs.2,000,00 / annum or will I be eligible for only 30 K / annum ?
*I got loan approved in Nov 2012 and first disbursement was made in Dec 2012.
* Handover got exceeded more than 3 financial years. 2013-14, 2014-15 and 2015-16. I’m getting my home in 2016-17 only.
Need your clarification on the same. Thanks in Advance.
Hi Shreekanth,
Scenario:
I bought an under-construction flat and registered it on Dec 2015. I applied for home loan and got the loan sanctioned on 15 March, 2016. My EMI started from April 2016. I will take possession of the flat on June 2016 and at that time will obtain the possession letter from the builder. I am a first time home buyer, loan amount is 21 lakhs and cost of home is 32 lakhs.
Questions:
1) Can I claim deduction for the principal and interest amount paid (for the FY 2016-2017 or the AY 2017-2018)? If yes, to what extent (amount) the deduction on principal and interest will be available and from which period onwards?
2) Can I claim deduction for the registration amount paid in Dec 2015 (for the FY 2016-2017 or the AY 2017-2018)?
3) Please guide me on the best way by which I can claim maximum possible deductions for the FY 2016-2017 or the AY 2017-2018?
Many thanks in advance…!
Mahesh
Dear Mahesh,
1 – Is it a Self occupied property or Let out one? Read: Income from house property & Income tax benefits on home loan.. You can claim these deductions from AY 2014-18 onwards.
2 – No. Kindly note that the registration & possession have to happen in the same Financial Year.
3 – Read: List of income tax deductions for FY 2016-17 or AY 2017-18.
Dear Shreekanth,
It is a self occupied property. What would be the tax implications. Please advice.
Thanks,
Mahesh
Dear Mahesh..The extent of tax benefit has been explained in the provided link, kindly go through the article.
Alright… Got it. Thank you so much Sreekanth. Now things are pretty clear.
Just one quick question, regarding the registration amount (around Rs.1.50 lakhs) which I had paid on December 2015. Can I claim it for deduction while filing income tax return for FY 2015-2016 (AS 2016-2017)?
If yes, 1) what would be procedure and under which head/section can i put the registration amount for deduction while filing the ITR -1 form?
2) My employer has deducted TDS of around Rs.6000/- for FY 2015-2016. Can I get refund after tax filing by showing the registration amount as deduction?
Thanks in advance!
Best Regards,
Mahesh
Dear Mahesh,
As mentioned in my previous comments, kindly note that the registration & possession have to happen in the same Financial Year for claiming the registration charges under section 80c.
Hi Shreekanth,
I purchased one apartment in Feb-2015 and started paying the EMI from April-2015.
In Mar-2016, i completed the registration of my apartment. But still i have not yet received the OC or possession letter from the builder, it may take another few months.People have already started occupying the residency without receiving OC since the building is 95% complete with few finishing works to complete.
In this case, am i eligible for tax exemption. if yes, am i also eligible for tax exemption on the amount paid for registration.
Regards
Ahsan
Dear Ahsan,
To claim registration expenses u/s 80c, the registration date & possession date should fall in the same Financial year.
One has to take the possession of property (get oc/PC) and then only can claim tax benefits.
Hello Sir,
My query is related to claim tax benefit for principal amount being paid before the actual possession of the flat. One of my cousin told me that he has been claiming tax benefits for principal amount being paid before the actual possession of the flat.
However, I’m not able to find any such clause or information which enables one to claim tax benefit for principal amount paid before the possession.
kindly see if you can share some information on this,
Thank you in advance,
Neeraj
Dear Neeraj..One can claim tax benefits on home loan only after get the possession of the property.
Hi Sreekanth,
A really good Article with deep insights on how taxes are calculated
I bought my property and registered the same in Dec-2013, First EMI deducted since Jan 2014
Builder has handed the allotment letter and house keys this week April 2016
Total Interest component was 4500- FY 2013-2014
1,21,00-FY 2014-2015
1,40,00-FY 2015-2016
My Employer (TCS) gives me benefit for Principal amount which was quite a meager amount till now
Few questions
1.Can I Claim PPI now , if yes then what will be the amount
2.Post allotment letter received , does this needs to be submitted to bank.. so that Interest component reduces
Dear rakesh,
1 – Yes you can claim the first instalment of PPI + Regular interest component of EMI (subject to aggregate limit if applicable) from FY 2016-17 or AY 2017-18, as you got the possession of the property in FY 2016-17.
2 – I could not get you. The interest component in EMIs would be high during the first few years of your loan tenure.
I had purchased two under construction property in 2013 costing Rs.23 Lakhs and Rs.27 Lakhs respectively. I am paying pre-emi on both till now as their construction period has extended and shall be completed by 2017 December. Now the bank is not ready to convert my pre-emi into EMI as it is construction linked plan. Now, kindly help me how and When can I apply for tax benefits for the pre-emi’s i have paid and would be paying till 2017.
Dear Varun,
Till the time you get possession of the properties, kindly note that you can not claim any tax exemptions.
I have in possession a property for which I have been claiming INR 2 Lacs as deduction each year for the last 2 years. However this year I want to show the same as deemed to be let out. Can I claim deduction for all the interest portion (i.e. preconstruction + post construction) minus 4 Lacs as I am declaring it as deemed to be let out in year 3 and also due to the fact that the property is located in Noida and I am staying in Delhi due to my job requirements. The unutilized portion of the interest is much higher than INR 2 Lacs till the end of the current financial year if all added together.
Dear Mr Singh,
If you are letting it out then you can claim the tax benefits as mentioned. But kindly note that you have to add the rental income too when calculating the ‘income from house property’..
sir just now I have booked a 3 bhk flate which is under construction and taken 20 lakhs loan from SBI in the last week of March 2016 and got this property registered in the my name. How can I claim tax benefits on interest + principal amount to be paid from April 2016 on wards. the ratio of principal + interested to be paid is approx. 11000 + 9500.00.
Dear SANTOSH..If the property is still under-construction, you can not claim tax benefits on your home loan.
Kindly read: Income from house property & Home loan tax benefits.
Hi Sreekanth,
I got home loan from Jan 2013 and my flat got registered now in April 04, 2016 . As per new rule for tax benefit – Can I claim for interest up to 2.5 Lac or it will 2 Lac only . This is my first home but since home loan took 3 years ago so bit confuse
Thx in advance….
Dear Jitender,
The new tax deduction provision of up to Rs 50k is for the loans that are sanctioned in the FY 2016-17 only.
I took home loan in June 2011 and got the possession in July 2015. If I am correct the per-emi period for me would be from June 2011 to Mar 2015. So I can claim the tax benefit by dividing the total interest paid during this time in 5 equal installments. Can I also claim 30000 as the possession happened after 4 years of taking loan?
If yes, then the total interest would be 30000 + total interest paid from June 2011 to Mar 2015 in 5 equal installments.
Am I correct or can I only claim either 30000 or total interest paid from June 2011 to Mar 2015 in 5 equal installments.
Please suggest.
Dear Gaurav..You can only claim Rs 30k as tax deductions. (Is this a Self-occupied property?)
Hi Shreekant,
How to calculate pre-emi? what all documents are required to know this? can u pls help me here?
We took a flat – possession in Aug-2015. Started pre-emi from Dec-2014. Loan amt -30L. I would like to claim the pre-emi. Pls help me understand in this.
Thanks,
Priya
Dear Priya,
You need just loan statement for the respective Financial years to calculate Prior Period Interest.
FY 2014-15, from Dec 2014 to Mar 2015 is your Prior period. The interest amount paid during this period can be claimed in 5 installments (subject to overall limits).
FY 2015-16, from Apr 2015 to Mar 2016 – You can claim 1st PPI installment + Regular EMIs.
Also read: Income form House property & Home loan tax benefits.
Hi Shreekant,
First of all, thanks for the explanation on the subject in detail. I just have one point to get clarified, request your help on it.
I purchased a under-construction house in Feb 2012 and applied for a home loan in March 2012. The home loan was sanctioned in April 2012 but the first payment released to the builder was in May 2012.
“Existing rule : To claim tax benefits on home loan of a Self-occupied Property, the construction has to be completed within 3 years from the end of the Financial Year in which the capital (home loan) borrowed.”
New Rule from FY 2016-2017: Increased to 5 years.
As per existing rule and revised rule, what would be the last month & year, I should get the Possession of the house for me to claim 2,000,00 (if house is self-occupied) ?
Also if not self-occupied but vacant, and staying in a rented place, how much interest can be claimed, is it 2,000,00 or no limit ?
Thanks in advance,
Shyju
As per the existing rule, for claiming benefit of Sec 24(B), where it says,
Dear Shyju,
As your loan was sanctioned in FY 2012-13, 5 years from this would be FY 2017-18 (March 2018).
Kindly read: Income from house property & home loan tax benefits.
Hi Sreekanth,
Thanks a ton for clarifying my query.
Regards,
Hi Sreekanth,
Thanks a lot for such detailed articles to make us understand on taxation and process of claiming tax benefits. Let me come to my query
1. I’ve one property (SOP) for which i’m claiming tax savings under 80C for Principal repayment and 24 for interest.
2. I also have another property for which the loan got approved in April 2013. I’ve been paying EMI (Principal +Interest) which i’m going to get registered in August 2016 which i’m planning to let out.
Queries
1. Can i claim interest paid from April 2013 to March 2016 in next subsequent years along with interest which i’m paying currently for SOP property?
2. If yes on point 1, is there any limit on the interest amount that i can claim for House 1 plus House 2?
3. Can i claim House 1 (Principal + Interest) + House 2 (Principal +Interest) for FY 2016-17 assuming that both principal amounts under 80C with 1.5 L limit?
4. Can i also claim registration for House 2 under 80C if i still have eligibility for 80C of 1.5L?
Thanks in Advance.
Dear Sitar,
1 – Yes.
2 – House 1 , as it is SOP , the aggregate limits are applicable. Read: Income from house property & Tax implications.
3 – Yes.
4 – Are you referring to Stamp & registration charges?
Thanks a lot for quick response. on Point 4 yes. Can i claim under 80C for House 2 (LOP)?
Dear Sitar,
Yes, but kindly note the below conditions;
For claiming deduction, you must possess the house also i.e. Payment for under-construction is not allowed. In simple words both payment of expenses and possession of the house must be in the same fiscal year for claiming expenses.
Deductions can only be claim, if expenses are for new residential house property for self and not for a resold property.
Joint owner can individually claim deduction of the expenses in the proportion they share the house property up to Rs.1.5 lakhs each under section.
Hello Sir,
I have taken home loan in July 2010 for under construction flat. As per the builder this should be completed by Dec 2013 but it took more time and this is completed in Oct 2015. I have taken possession in Nov 2015 and registry done in March 2016. I haven’t claimed any tax benefit so far. Now everything is done like possession and registry. Could you please suggest if I am eligible for tax benefit for my last five years interest paid on my home loan? If yes, then how can I claim?
Thanks,
Dear Pradeep..Is this a self-occupied property? If so, to claim Prior period interest the construction should have been completed within 3 years. You can now claim tax deduction of up to Rs 30,000 only.
Sreekanth,
With the change possession completion duration upto 5 years, can actual interest be claimed from next financial year or it will remain 30k only.
Hello Sir,
Could you kindly help me on Tax declaration for 2016-2017.
I am starting my Home Loan EMI of Rs. 29000 from this month. The property is under construction and I will be getting Procession only in ths September.
Could you kindly help me with the details , I can fill in for home loan principal/interest fields.
Thank You
Dear Joseph..Kindly go through the points given in the article.
Also read: IT declaration & Investment proofs.
Hi Shreekant,
I hv one query regarding Budget announcement of 80EE *Additional 50,000 for New home buyer)deduction.Suppose i want to purchase a home in F.Y.2016-17 (7 apr 2016-Registry date) and loan disbursement takes place on 2 Apr 2016 but its sanction has been given by bank in 29 Feb 2016 in this case can i take the benefit of 80EE(Rs 50,000)…pls guide me ASAP.
Thanks
Dear Shobhit..I believe that your case may not be considered for Section 80EE as the loan was sanctioned in previous FY.
Sir,
I wish to ask the following query. I was allotted a residential flat in 2010 by the Greater Noida Authority, against which I had taken home loan of Rs.13 lakh. In the year, 2013, I was informed that my flat, which was allotted in 2010, has been cancelled and against this flat, I have been allotted a new flat in another location/sector in Greater Noida. I must mention here that I did not transfer the loan against the property. The loan is till date running against my old flat, allotted in 2010.
The possession of the new allotted flat (allotted in 2013) will be handed over to me in the current year, i.e. 2016. Mine is not the only case. There are more than 500 allottees who are sailing in the same boat.
My specific query is :
1. whether I will get tax benefits for the loan which I took in the year 2010,
2. And if so, whether I will be able to get the tax benefit for the whole period of 5+ years,
3. Whether my loan will be treated as started in the year 2013, since TECHNICALLY I was allotted a flat 2013 and its possession will be handed over in 2016, so technically the flat will be given to me in 3 years’s period, that is there to get the interest rebated paid against the home loan.
I would request you to kindly guide me/us in the matter. Your expertise will help a lot of persons stuck in the same situation.
Thank you very much in advance for your response,
RK
Dear RK,
Very tricky situation indeed…
The home loan taken on the property is actually not owned by you. May I know the reason for not informing to your banker? Ideally, you should have informed your banker.
Dear Sir,
First of all thank you very much for considering my query. Actually, it was not intentional on my part to not to inform the bank. In fact, I wanted to inform the bank about this and I did consult the Agent through which I had taken the loan who suggested me that as long as I am re-paying the Home loan, there is no need to inform the bank.
In addition, I was asked by the Greater Noida Authority to pay on instalments a sum of Rs.4 lakh against the new allotted flat in 2013 as the area of this flat was a little bit on higher side. Since I could pay the instalments on my own, I also thought that once I will get the possession of the flat, I will inform the bank accordingly.
Keeping this in view, you are requested to guide me, for which I shall be grateful to you.
RK
Dear RK,
I believe that your agent is wrong in saying so. Kindly inform your banker immediately and also take legal opinion on this matter (if required).
Hi Shreekanth,
I have got “offer for possession” letter for my flat in Jan 2016. I have also made the final disbursements to the builder. But due to some issues I don’t think the final registry of my flat can be done by March 2016!
Please clarify,
1. whether the “offer for possession” letter by the builder (and documents supporting entire due cleared) will be considered as a proof for my housing loan interest tax exemption for the year 2015-16?
2. Also, since the offer for possession letter came in January, do I take interest tax exemption on the entire 2 lac amount for 2015-16 or do I need to go through the PPI route?
3. Can I tax exemption benefits both on HRA as residing in rented house in another city & paying EMI on housing property in different state or city in my name ?
The loan amount is 18 lacs and the final possession is being offered within 3 years.
Request a clarity on the proof documents required and tax exemption both on HRA & interest on housing property.
Thanks!
Dear Puneet,
1 – The property is not in your name yet and you are currently not the owner of the property, so I believe that you can claim tax benefits from FY 2016-17 onwards (if registration is done in FY17).
2 – You can claim PPI + regular EMIs (subject to ceiling limits)from FY 2016-17.
3 – Yes.
Read : Income Tax Declaration & Investment Proofs.
Hi Sreekanth. This is Ram from Hyderabad. I would be really grateful if you can solve my confusion
I have taken a loan for 34 Lakhs — HDFC bank gave Loan sanction letter dated March 3rd 2016
However, after legal checks and all now I decided to have Final Disbursement on April 1st 2016 and get the registration done on April 2nd 2016.
As per the new rule in Budget, will I be eligible for another 50k tax deduction considering I am taking disbursement and doing registration in April 16 or will I not be eligible
Dear Ram..As the loan is sanctioned in FY 2015-16, I doubt if you would be eligible for new & additional deduction.
“First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.
The home loan should have been sanctioned in FY 2016-17.
Loan amount should be less than Rs 35 Lakh.
The value of the house should not be more than Rs 50 Lakh &
The home buyer should not have any other existing residential house in his name.”
Is this applicable for under construction property
i have take construction loan for extended of build premises . so i will take loan on my name and second name is my father. and property on my father name who is eligible for take tax benefit
Dear valand..If your father is the sole owner of the property, only he can claim the tax benefits on home loan.
Hi Shreekanth ,
As i finalized a flat i pay only booking amount , and apply for home loan in SBI.
Is there is any advantage of taking loan in April 2016 rather than March 2016.
please suggest
Dear Kapil,
If you take loan in FY 16-17, you can claim an additional tax deduction under section 80EE.
This is a new proposal which has been made in Budget 2016-17. First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.
The home loan should have been sanctioned in FY 2016-17.
Loan amount should be less than Rs 35 Lakh.
The value of the house should not be more than Rs 50 Lakh &
The home buyer should not have any other existing residential house in his name.
Also, kindly read: MCLR, new base rate system w.e.f April 2016..Details..
Hello,
I have a house (50% share with my husband) and pre-construction interest (3lakh) between is there till March 2014. I am studying now and had no income in 2014 (no rental income also as the flat was under-construction). How do I factor this Pre-construction interest, 60k each year for 5 years, even though I have no income in 2014 OR 75k for 4 years from the time rent starts flowing.
Please help so that I can file my IT returns.
Thank you
Dear Choudhuri,
Is your husband claiming tax benefits on this property? Has the construction been completed?
Once you get rental income, you can claim 50% of it and show in ITR and also claim respective Prior period installment interest + regular EMIs as tax deductions.
Also, read: Income from house property & tax implications.
Hello Sreekanth,
My husband has claimed tax benefit up to 50% of pre-construction interest (i.e. total was 6 lakh, on this he claimed 20% of 50% of 6 lakhs = 60k) in 2014 as he had income in India in 2014. Now he is NRI and again with no income in India (apart from rentals which flow in from Apr 2015).
Please suggest how should I file my 2014 IT returns
Dear Choudhuri,
Both of you can claim the PPI + regular EMI as tax deductions and deduct from the ‘rental income’, while filing your respective ITRs.
Kindly go through the referred article in my previous comment.
Hello Shreekanth,
My problem is that I have absolutely ZERO income in 2014-15, so there is no point in claiming Pre-construction interest (60k = 20% of 50% of 6lakh) in this year. Can I instead claim in next 4 years an amount of 75K (=25% of 50% of 6lakh) ?
Thanks, awaiting your reply urgently as I still need to file my IT return.
Dear Choudhuri..Yes you may forgo the installment and claim the remaining ones in the future while filing your ITRs.
I have purchase a home in 2006 , last 10 year I paid only pre interest Rs.711200. i have got possession in Sept 2015. How can i take rebate of Rs.711200
Dear jayant,
As the construction period is more than 3 years (assuming your property is a Self-occupied one), you can claim interest payments as tax deduction up to the extent of Rs 30,000 only.
Hi Sreekanth,
I have sold my 1st flat after 5 years & planning to close the home loan for my second flat ( loan balance 1350000) I don’t see much tax benifits . Now I’m in dilemma whether to close the home loan or invest the money in equity/MF/ FD etc. One way I think if I close the loan I will be free from Emi & the same amount I can invest in MF via SIP every month. What is wise, whether to close the home loan ? Or invest in equity MF
Dear BRN,
Have you already allocated sufficient savings out of your disposable income towards your other high priority goals? like retirement, kid’s education (if applicable) etc?
If not, suggest you to continue with the EMIs and invest this money for long-term goals.
In this budget additional 50K benefit is proposed of home loans < 35L taken after 1st Apr-16 for house value <50L.
Q1. Does house value means Agreement value as written in Index 2 & agreement . ? or with Stamp duty & Taxes ?
Q2. If property is under construction and ongoing loan is shifted to other bank starting say May-16 this deduction is applicable ?
Dear Ravi,
1 – I believe that its the Registered Value.
2 – Not applicable (but not very sure).
Hi Shreekanth,
If the house is not constructed within five years as per new ammendments. Then only the Prior period interest exemption is waived off or even the running interest cost post possession date will also be waived off?
Dear Bhuvanesh..In such a scenario, interest payments of up to Rs30,000 would be allowed as tax deduction on Self-occupied properties.
Dear Sreekanth,
I have taken a loan from SBI for buying a under construction flat. The loan account (OD account) was setup in April 2015. The first disbursement was in Aug 2015 and first EMI was Sep 2015. Since the loan was taken in FY 2015-2016 does the 3 year rule apply ? So if the flat is registered by FY 2018-19 I can claim benefit for PPI, Interest (under sec 24) & Principal (under sec 80C) after registration
Nithin
Dear Nithin,
Based on the info that is available now, the construction can be completed within 5 years starting from Assessment year 2017-18.
DEAR SREEKANTH JI,
STILL WAITING FOR YOUR REPLY?
YOUR REPLY SHALL BE OF GREAT HELP.
REGARDS
ANIL BANSAL
Dear Anil..I have already answered your query. If the registration is not yet done, you can not claim tax benefits on the home loan.
DEAR SREEKANTH,
THANKS FOR YOUR REPLY. MY QUERY IS STILL NOT FULLY ANSWERED:
TOOK LOAN FOR BUILDER FLAT IN AUG,10. EMI ENDING IN JULY,16. POSSESION OFFER FROM BUILDER RECD IN OCT,15. THOUGH STAMP DUTY FOR REGN ALSO PAID TO BUILDER IN OCT,15 ITSELF, REGISTRY IS YET TO BE DONE.
PROPERTY IS NOT SELF OCCUPIED. GETTING WOODWORK AND OTHER FINISHING WORKS DONE AFTER GETTING FLAT IN OCT,2015.
PLANNED TO GIVE FLAT ON RENT FROM APRIL,16. HOW CAN I CLAIM INCOME TAX REBATE ON LOAN INTEREST ACCRUED FROM 10-11 ONWARDS.
PROPERTY IN JOINT NAME, LOAN ALSO TAKEN IN JOINT NAME.
YOUR REPLY WILL HELP ME IMMENSELY.
Regards
The period of 3 years or 5 years (2017-18 AY onwards) during which house has to be completed/constructed is counted from the end of the FY in which capital was borrowed. If the capital was borrowed in 4-5 tranches as is the case of a construction linked plan spreading over 2-3 financial years. So in this case period of 3 years/5 years will count from end of First financial year in which borrowing was made or the last FY.
I am applying for a housing loan in March, 2016 and will get processed immediately. The first disbursal will happen in April,2016. So will the 3 year period start from 2016-17 or 2015-16?
Dear Jay..Starts from FY 2015-16. If possible you can take the loan in FY 2016-17.
The construction can be completed in 5 years, for the loans taken in FY 2016-17.
Also read: New base rate system from Apr 2016: MCLR
DEAR SREEKANTH,
TOOK LOAN FOR BUILDER FLAT IN AUG,10. EMI ENDING IN JULY,16. POSSESION OFFER FROM BUILDER RECD IN OCT,15. THOUGH STAMP DUTY FOR REGN ALSO PAID TO BUILDER IN OCT,15 ITSELF, REGISTRY IS YET TO BE DONE. FLAT SHALL BE ON RENT FROM APRIL,16. HOW CAN I CLAIM TAX REBATE ON LOAN INTEREST ACCRUED FROM 10-11. PROPERTY IN JOINT NAME, LOAN ALSO TAKEN IN JOINT NAME.
REGARDS
ANIL
Dear Anil..If it is a self-occupied property, you can claim tax benefits of up to Rs30,000 only.
Dear Sh SREEKANTH,
PERHAPS MY QUERY IS NOT UNDERSTOOD. I CLARIFY:
PROPERTY is not self occupied.
Got possession only in OCT,15. Getting woodwork,etc done after that.
Planned to rent from April,16.
Regisrty for flat not done though stamp duty draft paid to builder in Oct15 for Registration.
I booked flat in 2010 and took loan and EMI started in AUG10 and ending in JULY16.
CAN I CLAIM ANY LOAN INEREST REBATE IN INCOME TAX IN CURRENT FINANCIAL YEAR.
Regards
Dear Anil..No
Hi Shreekant,
can you please help in understanding following clause in detail:
This amendment will take effect from 1st day of April, 2017 and will, accordingly apply in relation to assessment year 2017-2018 and subsequent years.
It says that the amendment will take effort from 1st day of April 2017. Does that mean we have to wait for one more year to get benefited from this change?
I took loan in January 2013 and will be getting possession around July 2016. In this case, I will be getting possession after completion of 3 financial years from the financial year when loan is taken. Now while filing return for 2016-2017, can I claim benefit of prior period interest or I will have to declare property as let out for getting that benefit.
Thanks
Manish
Dear Manish,
Yes. It means that this new amendment is applicable when you file your ITR in 2017 (for AY2017-18).
This AY 2016-17, you can not claim the tax benefits as the three year rule is applicable for AY 2016-17 and you are getting the possession only in July 2016, which is beyond the THREE year limit.
dear sreekanth and manish,
loan taken in jan 2013.
pposession jul 2016.
construction to be completed within 3 years from the end of the finanacial year. so in this scenario , 3 years from the end of . f.y. 13-14
so, fy 14-15 15-16 16-17. which is within three year limit. in this scenario, time limit for posession is mar 2017.
so mr manish b relax
regards,
bijaya email : [email protected]
Dear Bijaya,
Thank you for sharing your views.
But from the end of FY 2012-13 + 3 years it would be till MAR 2016 only right, If Manish gets the possession in Jul 2016, it would be FY 2016-17 (beyond the three year limit). (or) Am I missing something here??
Jan 2013 falls in FY2012-13 & not FY13-14 as mentioned by you. Hence the 3 year period ends in March 2016
Actually 2017-18 is the AY. But if possession is in 2016-17 (FY) as is in your case. 5 year period is allowed from 01.04.2016 onwards (FY). so in July 2016 only 3 years and 6 months shall have been completed (< 5 years) hence you become eligible.
Just to reframe my quesion:
I took loan in January 2013 and will be getting possession around July 2016. In this case, I will be getting possession after completion of 3 financial years from the financial year when loan is taken. Now while filing return for AY 2017-2018, can I claim benefit of prior period interest or I will have to declare property as let out for getting that benefit.
Also if I declare my property as Let Out, can I claim benefit of principal repayment as well?
Dear Manish..Yes, I believe that you can claim PPI + regular EMIs (subject to ceiling limit) from AY 2017-18.
Hi Shreekant,
I have got “offer for possession” letter for my flat in Feb 2016. I have also made the final disbursements to the builder. But due to some issues I don’t think the final registry of my flat can be done by March 2016!
Please clarify,
1. whether the “offer for possession” letter by the builder (and documents supporting entire due cleared) will be considered as a proof for my housing loan interest tax exemption for the year 2015-16?
2. Also, since the offer for possession letter came in february, do I take interest tax exemption on the entire 2 lac amount for 2015-16 or do I need to go through the PPI route?
The loan amount is 45 lacs and the final possession is being offered within 3 years.
Request a clarity on the proof documents required as the brokers are armtwisting and demanding huse sum of money to “somehow get the registry done in March 2016 itself!
Thanks!
Dear vikas,
As the property registration is not done, you are not yet the owner of the property, hence you may not be able to claim tax benefits.
Read: Investment proofs..
Hi Sreekanth,
I found your article very informative and useful. Thanks a lot for this.
I have been looking for some information on home loan interest. I bought an under construction property in May 2014 valuing 58L. Though it was supposed to be completed by Dec 2015 as promised earlier, Land owner isn’t ready for registration of the property yet as he bought the land in 2013(Less than 3 years until June 2016)and is trying to save on capital gain. I believe I cannot avail any tax exemption this year due to this.
Can you please help me understand the extent of loss that I would incur due to this delay in registration(in June 2016) and is there anything that I can come to an agreement to with the owner to reduce this loss.
Also , in case I try and get the property registered by this March 2016, can I avail tax exemption on home loan interest while filling returns for this year itself(financial year 2015-2016).
Thanks in advance.
Dear Shweta,
If you get the property registered in mar2016 and take the possession of the house, you can avail Prior period interest + Regular EMI (interest portion) u/s 24b (subject to aggregate limits)
In case if you take the possession in FY 2016-17, then you can claim tax benefits from FY 2016-17 only.
Hi Sreekanth,
Nice article , I have a query , it would be glad to hear from you.
I have bought a house in November 2013 but still the House is in under construction and am paying the Home Loan EMI since Nov 2013. How can i claim the tax benefit for the same as I have been paying the Interest and Principal amount for the same.
Regards,
Sachin Gogri
Dear Sachin,
Kindly note that you can not claim tax benefits on Home loan till you get possession of the house.
Hi Sreekanth,
I am planning to take home loan for a property which is in my Grand-mother’s name and she is no more. So SBI said that my father and me can take jointly and the emi will be deducted from my account. In which case I can avail the benefits under income tax. How true is it?
Dear Shankar..Suggest you to visit Tahasildar office / revenue office and get the property mutation done in your name & father name. You should be the owner/a co-owner of the property to claim income tax benefits.
I have taken home loan in mar 2013 for under construction project and builder is handing over the flat in apr 16. As it is more than 3 years means would not be eligible for 2L tax benefit on interest. Please answer.
Also if i will get the possession letter from builder and later on will do the registration. Would i be eligible for the 2L tax benefit on interest.
Dear Suraj,
You may try to get the possession atleast in Mar 2016. Else only Rs 30000 can be claimed as tax deduction u/s 24.
How can you take the possession without owning the property?
Thanks Shreekanth for reply.
Now Possession period for property raised to 5 years to avail tax benefit on home loans as per the budget 2016-17. So it means now 3 years clause will not be applicable for me.
Or it would be applicable only for the new home loan.
Dear Suraj,
I believe that it is applicable for new loans taken from FY 2016-17 (or) AY 2017-18.
Hi Sreekanth,
want happens now after todays budget and additional deduction of 50000 been added.
1) i recently signed an agrement to buy pre contruction property and value of the house is 68 lakhs?
emi will start from april 2016
do i qualify under this ppi scheme.can i claim it.after i self own it after 2 years of posession (dec 2018)
2) benefit upto 2 .5 lakh per year or consolidated across 5 installments?
Dear akshay,
If it is SOP the maximum limit u/s 24 is Rs 2 Lakhs only (including PPI installment + regular EMI).
Also note that new additional deduction is applicable if the Property value is less than Rs 50 Lakh.
Another latest update is, the construction can be completed within 5 years instead of the existing rule of 3 years. But this is applicable from FY 2016-17 / AY 2017-18.
Dear Mr. Sreekanth. I liked your post very much.
My query is- currently i am staying in banglore on a rented house and paying the rent and claiming HRA. I purchased one house in Banglore and got the possession in the month of Feb,16 on which i had taken a loan and i paid an interest 0f Rs. 3 lakhs.I am unable to stay in the house for another 2 months because i have to complete the interior so i will still stay in the rented house for next 2 months(Feb and March,16).can i claim the HRA for total 12 months and interest deduction of Rs. 2 Lakh both in the financial year 2015-16?pls help
Dear Swarna,
I believe that since you have not taken the possession of the house and also if you claim HRA for 12 months, you may not be eligible to claim tax benefits.
Hi Sreekanth,
I have taken a home loan for my flat which is still under construction. The home loan was approved in Oct 2013. I am aware of the IT rule that to obtain the benefit of Rs. 2 Lacs exemption for the interest paid you should have obtained the possession of your house within 3 years from the time the loan was approved. With the way the construction is going on it would exceed 3 years. Can you please advise what should I be doing to obtain the benefits of the interest cap (Rs 2 lacs).
Dear Shibu..You may ask your builder to complete the construction and give your the possession within 3 years.
Hello Sreekanth!!
If the builder is not able to deliver the OC within 3 years, do we stand to lose out on tax benefit in the subsequent years!
Is there a way out..pls suggest!
Dear Dinesh..Yes, the construction has to get completed within 3 years and the owner has to take the possession of the property, else the tax benefits can be limited to Rs 30,000 only (on interest payments).
Hello Srikant,
For a person like me who doesn’t understand the nuances of finances, this was a simple and easy to understand article. Thanks for the detailed information.
Please clarify these queries..
1. Can the stamp duty and registration fee be claimed for exemption, even for an under construction property? If so, under which section? How much?
2. What exactly is section 80EE for the first time home owners? Is it applicable for under construction property?
Dear Reena,
1 – For claiming tax deduction, you must possess the house i.e. Payment for under-construction is not allowed. In simple words both payment of expenses (towards stamp duty/registration fees) and possession of the house must be in the same fiscal year for claiming expenses.
2 – Section 80EE deduction on the Home Loan Interest paid by you is valid for financial years 2013-14 & 2014-15 (Assessment year 2014-15 and 2015-16) only.
To claim the benefit under the section 80EE –
2- You must be first time home buyer (this is your 1st house purchased)
3 – Value of the house is Rs 40 lakhs or less
4 – Loan taken for this house is Rs 25 lakhs or less
5 – Loan has been sanctioned by a Financial Institution or a Housing Finance Company
6 – Loan has been sanctioned between 01.03.2013 to 31.03.2014
7 – As on the date loan is sanctioned no other house is owned by the tax payer.
Dear Sreekanth,
Thanks for sharing your insights.
A) I have a question; I had taken a home loan in May 2013 (Date of first disbursement), the property is still under construction and I will get letter of possession by Oct’16. I have heard about sec 80EE, I did not make any deductions through 80EE in last 2 financial years. Is there a way to get relief in this FY ending on 31st March’16?
I took a loan of 10 Lacs and property value was 25 Lacs. Please suggest.
B) For the same loan, can I claim 80 C relief for stamp duty as I am the primary borrower for loan but second applicant in agreement with builder?
Dear Deepanshu,
Whether it is Section 80EE/Section 80c, one can not claim tax benefits till he/she gets the possession of the property.
Section 80EE deduction on the Home Loan Interest paid by you is valid for financial years 2013-14 & 2014-15 (Assessment year 2014-15 and 2015-16) only.
b- Has the property been registered?
Hi Sreekanth,
I would appreciate if you could help me with following queries.
For a 2 BHK I have taken a home loan in Sept-2012 Till Feb 2016 I have not received the flat and loan is also not fully disbursed. Please let me know what impact will it have on Pre-construction period and post possession interest payments tax rebates.
If my understanding is correct for Pre-construction period tax exemption on interest will be 30000 per year and post possession tax exemption on interest will be 200000.
Thanks,
Ali Sajjad
Hi Sreekanth,
I have found your posts very helpful. Could you please clear out my few doubts as well so that I can avail benefit by convincing the HR.
I have purchased a flat in Aug 2013 with the total cost around 43 lakhs and received the “Offer of Possession letter” on 18 April 2015. But was unavailable to take possession till now due to some other issues but have made all payment to builder.
-> As I have Offer of Possession can I avail benefits for any Interest and Principal repayment with this letter or Possession letter is mandatory for this.
-> Before possession I have paid a large amount of Principal amount for what amount and how the benefit of this can be taken?
-> As I understand with your above posts I can avail benefits of Interest paid before possession in consecutive 5 years by 1/5. Right?
-> The loan account is joint so can both the benefits availed both by my Mother and me?
-> If I want to avail benefit for next 5 years then in that case my Loan Account needs to be active for future?
Timely response is greatly appreciated.
Thanks,
Gaurav Gautam
Dear Gaurav,
If you have received the possession letter and kept it vacant, you can still consider the property as a self-occupied property and claim tax deductions on home loan EMIs.
If your mother is a co-owner and co-borrower, she can also claim tax benefits.
Yes, to claim tax benefits, the loan a/c should be in active mode.
I did not get your point about ‘large amount of principal’..
Hi Shreekant,
I have got “offer for possession” letter for my flat in Feb 2016. I have also made the final disbursements to the builder. But due to some issues I don’t think the final registry of my flat can be done by March 2016!
Please clarify,
1. whether the “offer for possession” letter by the builder (and documents supporting entire due cleared) will be considered as a proof for my housing loan interest tax exemption for the year 2015-16?
2. Also, since the offer for possession letter cam in february, do I take interest tax exemption on the entire 2 lac amount for 2015-16 or do I need to go through the PPI route?
The loan amount is 45 lacs.
It would be great if you can reply on this. Going through a lot of anxiety as the brokers are demanding huge sums to “somehow get the registry done in March 2016” for interest tax benefits!
Dear Sreekanth,
Thank you very much for nice clarification.
Please let me inform what will be the tax treatment if Prabhas did not let out the property?
Dear Sanjit..As the interest amount (PPI installment + regular interest) is less than Rs 2 Lakh, he can claim the entire amount u/s 24, even if it is a Self-occupied property.
(The prior period interest installment plus ‘normal interest’ is allowed to the extent of Rs 2 Lakh only in-case of a Self occupied property. There is no such restriction if the property is a ‘Let-out’ one.)
Hello Sreekanth,
Can someone claim HRA of 4 Lakhs per Annum considering the fact that the person has been given the PAN card number of the Land owner.
– Ram.
Dear Ram..It depends on your salary, actual hra received & rent paid. Click here to calculate HRA exemption amount using HRA Calculator.
Hi Shreenath,
I had taken a loan in September 2010 while the possession is due in March 2016. I paid preEMI for 3 years and then restricted the loan amount to convert it into EMI. 1 year back i repaid the whole loan amount and closed it. I am located in Bangalore while the property is in Noida, am i eligible for tax saving on PreEMI interest given i am not occupying the house ?
Thanks,
Saurabh
Dear Saurabh..One can not claim tax deductions on a closed loan account.
Loan sanction in Feb 2012 , but Actual property possession I got in May 2015 from Builder.
Now for first Initial period 2012-13 , 13-14 , 14-15 and 15-16 I was not able claim the interest paid till date. for this year 2015-16 I was allowed to get the exemption max 30K.
Now , My question is would I be eligible to claim the entire tax amount from 2016-17 period alongwith with the previoud interest paid (divided by 5) for 5 consecutive year , but max 2Lac only.
Or Now I am only eligible to claim 30K for entire home loan tenure ? please confirm
Dear ASHISH..You can claim up to Rs 30,000 only.
From when 3 years period is calculated ?
Is it from loan sanction date or first disbursement date or last disbursement date ?
Please let me know.
Thanks,
Sachin Singh Gour
Dear Sachin,
To be frank, there are many arguments to this. My take on this is, ‘FY in which the last disbursement’ has happened.
Hi, Sikanth,
One of the best financial info. read after a long time. Your explanation is so practical and easy to understand.
looking forward to see many more such good articles from you.
regards,
Dear Vijay..Thank you and glad to know that you like my blog. Do share it with your friends. Keep visiting, cheers 🙂
HI Sreekanth,
I have availed a loan of INR 36L in Oct 2012. However, builder is giving for occupation only in Mar 2016.
Can I avail housing loan interest tax benefit retrospectively for INR 2L for 2012-2015?
What are the impacts if the house is self-occupied or rented? conditions prevail for both the same?
Pls clarify.
Dear Azad,
If you can get the possession my Mar 2016, you can claim PPI + regular EMIs as tax deductions (subject to aggregate limits) from this FY itself AY 2016-17).
To claim income tax benefits on home loan, the construction has to be completed within 3 years from the date (FY) of loan disbursement. This clause is applicable for self-occupied properties only.
Kindly read : Income from house property & home loan tax benefits.
Hi Manish,
I’m planning to buy an under construction property. Say, my loan disbursement starts in Apr, 2016 and if by Mar, 2019 I don’t get possession (due to delayed construction) then can I still claim interest exemption for these 3 years once I get possession ? Assume that I get possession in Mar, 2020 and that I have one more self-occupied property in the same city.
Thanks a lot.
regards
Abhishek
Dear Abhishek,
The three year construction clause is applicable for Self-occupied properties only. The construction has to be completed within 3 years from the end of FY in which the loan has been taken. Else one can claim interest payments of up to Rs 30,000 only as tax deductions.
We (Me and My mother) have taken home loan of 38,40,000 at 9.5% for 25 Yrs resulting in EMI of 33550. Flat is under construction and possession is expected by Nov’16. Out of this, builder is currently asking for 28,40,000 and we have processed the same. This amount will be released in Feb’16. My mother is first applicant and I am co- applicant. Currently, I have submitted ECS from my salary account for EMI deductions, but for tax benefits it can be done in parts from my mother’s account also, as she is also tax payer.
1. How much EMI we are supposed to pay as it part disbursement and since when? What is Pre-EMI and Full EMI?
2. Once I get possession of house, should we show it as self-occupied or rented as there are few tax benefits of rented house?
3. How about stamp-duty and registration cost will be handled which will be around 3,00,000?
Dear Rishi,
1 – Where you have availed only a part of the loan, you would be required to pay to the banker only the interest on the amount disbursed till the full loan is availed. This interest is called pre-EMI interest (PEMI) and is payable monthly till the final disbursement is made, after which the Regular EMIs would commence.
2 – It’s your call. Kindly read : Income tax benefits & home loan.
3 – You can claim them u/s 80c (aggregate limit Rs 1.5 Lakh). You can claim this for the FY in which the registration of the property happens.
Dear Sreekanth,
Through your post, I got certain clarity that in case of self occupied home, you can not claim rebate on pre-construction period if it is more than 3 years.
In my case, Capital borrowed from Bank in April 2011 and possession given in July 2015, this means 4 years of pre-construction period. I have rented out the property in January 2016.
Can I still get all my interests for previous years as rebate.
Your guidance is really appreciated.
Regards
Pranav
To add to this, the final disbursement of loan took place on 18 August 2012, this makes effective prior period as 3 years. Is this workable?
Dear Pranav..I believe that you can claim PPI first installment in this FY along with the regular EMIs.
Dear Sreekanth,
Last bit… Is the 3 year rule applicable for self occupied house or is it applicable to house rented after possession.
Dear Pranav..It is applicable for self-occupied property only. There is a wide speculation that budget 2016 may propose some new rules related to this clause. Let’s wait till this month end for more details.
Hello Sreekanth,
I request your feedback on this topics for my case. I took home loan for under-construction property in Nov-2011.
Possession was received in Dec-2014 and I am staying there since then.
Interest paid is as follows:
2011-12 – Rs. 52,614
2012-13 – Rs. 1,63,803
2013-14 – Rs. 1,96,132
2014-15 – Rs.1,91,269
Am I eligible to seek tax exemption for per-construction period from 2011-12 to 2013-14 or till 2014-15 ?
Regards,
Deepesh
Dear Deepesh,
In the FY 2014-15, you could have claimed the regular interest payment + Prior period interest amount first installment (interest amount paid for 11-12, 12-13 & 13-14, subject to overall aggregate limit).
In this FY 2015-16, you can claim regular EMIs + second installment of PPI (subject to Rs 2Lakh limit u/s 24).
Thanks a lot Sreekanth !!
This year I am claiming Rs. 2 Lakhs even though aggregate is more.
But last year I missed out. I got a advise from tax consultant that since I filed ITR before Aug-2015 (well before last date), I could still file revise returns and seek refund before 31st March, 2016.
Is this advise correct ?
Regards,
Deepesh
Dear Deepesh..You mean to say that you did not claim any tax deduction u/s 24? (Income from house property).
If so, yes you revise your returns. Do take the help of your CA/Tax consultant.
Dear Sreekanth
At the outset let me compliment you on the fine aticle on Home loans. You have explained the entire content in a very simple and convinient manner. Your replies to various quairies are also fantastic. GOOD JOB!!!
Though i have understood the basics, I still feel i should approach you for expert advise in my case.
I ve availed an housing loan wef Nov 2010 and i got possession of my house only in Jan 2015. I have paid the following interest as follows;
FY 2010-11 – Rs 74,599
FY 2011-12 – Rs 2,17,130
FY 2012-13 _ Rs 2,06,404
FY-2013-14- Rs 1,94,673
FY 2014-15 Rs 1,81,841
I have filed my IT return without taking benifits of the interest components towards exemption. May I kindly request you for advise , can I file a revised return now and what is the rate / amount at which I can claim the rebate. In case the Prior Period amount when added to the present amount exceeds 2 lakhs , can one claim rebate above 2 lakhs in this case.
Dear Kalyan..Is this a Self-occupied property? If so, the construction has to be completed within 3 years from the loan disbursement date.
Unfortunately, in your case it is 5 years (construction period), so I believe that you can not claim Prior period interest.
Thaks a ton Sreekanth for for your prompt response.
The house is vacant at present so i guess it should come under the category of Self Occupied. I want to clarify, in case I dont get the benifit of getting the Tax rebate on PPI by spreading it over the next 5 years, can I get a rebate of Rs 30,000 Per year in addtion to the existing rebate on interest paid that year under section 24. Should this(if applicable ) Rs 30,000 be multiplied by the no of years EMI paid prior to getting possession of the house be claimed in one go or should it be claimed at the rate Rs, 30,000 + the existing EMI paid that FY and thereafter for the no of years the EMI was paid in the consequtive IT returns in the future.
Regards Kalyan
Dear Kalyan,
I believe that you can claim interest on housing loan up to Rs30k only per year as tax deduction as the construction is not completed within 3 years period.
hi sreekanth,
i am prabhu i have query regarding i have taken loan for purchase of plot from lichfl in 2012 and i started construction on the same plot in 2014 by clearing all loan from lichfl and taking loan from sbi for for construction. my query is can i claim interest paid to lichfl in 5 installment stating construction period interest.
thanks
regard
prabhu
Dear prabhu..As you have already cleared that loan Plus it is for vacant plot, you can not claim tax benefits on LICHFL loan.
1.To purchase house on 1.2.1999 a loan of Rs 400000 was taken at the rate of 15% .the loan was paid up on 31.12.12.A.Y 2013 -2014.the house is for let purpose plz give me your suggetion how to solve .
you cannot claim any deduction us 24 for the ay 2015-16 as it is available on accrual basis
Dear Sree,
I got some idea about above articles, but still i have few queries is:
I already paying for a housing loan which in my home town and my parents are living there. I brought a under construction flat in Mumbai for that i took home loan and possession is still not confirmed. And my job in other city where i am living on rent, so i want to ask about few things
1. This year i can’t claim home loan re bait for under construction flat and interest amount of this financial year/5 will add in next year home loan relaxation.
2. Can i claim home loan re bait for home where my parents are living that loan also on my name.
3. Can i claim for HRA also and how much will be HRA relaxation.
4. And i have claimed HRA in last year return, can i claim it in this financial year.
Thanks & Regards
Amit
Dear Amit,
1 – Ok.
2 – Yes.
3 & 4 – Yes you can claim HRA, depends on your salary structure.
Hi Sreekanth,
How can I claim pre-EMI for our flat?
Note: Possession of the flat is Aug 2015 and we started pre-EMI from Dec 2014. I would like to claim the pre-EMI interest paid.
Please let me know how to claim or what documents are required.
Thanks,
Priya
Dear Priya..I believe that we have already discussed on this.
Hi Sreekanth,
Thank you for making this article which are very helpful.
My question is how we can claim Pre-construction interest benefit, as ITR-1 only allowing upto 2 lac deduction for housing loan. shall we need to submit any other ITR to avail Pre-construction interest benefit?
Even our organization also not having provision for Pre-construction interest benefit during tax proof submit.
Waiting for your response.
Thanks.
Jayjit
Dear Jayjit..The overall aggregate limit (PPI + Regular interest) is still up to Rs 2 Lakh only (on Self-occupied Property) u/s 24.
Dear Sreekanth,
Your blogs are really helpful to understand home loan benefit in IT. I read all blogs but having a typical question which may be applicable to many other home loan buyer.
I took home loan of Rs 29,50,000/- for the flat which is under construction. My first disbursement of loan was on Sep 2012 with only Rs. 10,000 to avoid lapse of six month period of loan approval and amount credit to my account.
My first disbursement to builder was in May 2013 and still final (5% at the time of possession) need to be paid which will be in Oct 2016 (not sure as project got delayed).
As EMI has started after 18 months(as per approved sanction letter) from the date of loan sanction and paying EMI from Nov 2013.
I did not get possession so i can not claim interest and principal benefit but what date of disbursement of loan will be counted. If i will consider Sep 2012 so next year i will get benefit of Rs 30,000/- only and what about the principal amount paid which i am paying.
Don’t we have any provision in income tax to get these benefit (may in future as tenure of home loan is 20 years). At present i am paying 3,00,000/- as interest and Rs 60,000/- as principal per year.
Thanks,
Gagan
Dear Gagan,
You can consider ‘last date of Loan disbursement FY’ while checking the ‘within the three year clause’. Also, this 3 year construction clause is applicable for Self-occupied properties only.
I have taken a flat at bangalore for 58 lakhs in 4 /8 /2014which is under construction I have taken loan from LICHFL of 41 lakhs for which I am paying EMI as interest I will get possession in the year 2016 I am staying in the house of my parents so no rent is paid after possestion of house I am planning to give the house in Rent . Pls advice me how i will get tax benefit under PPI ,
Dear sajal..Kindly let me know the month? (which month of 2016)?
Hi Sreekanth,
I have one house in Gurgaon(under Joint ownership with my wife) for which I am still paying EMI. The house is on rent as we have shifted to Chennai and My wife is claiming tax benefit for this house.
In Chennai, we have been staying on rent and I have been claiming HRA.
In 2011 we bought another under construction apartment in Chennai(joint ownership) and the same got completed in December 2015.
After interiors I also plan to give this house on rent. I would still keep staying in the rented house due to convenience(proximity of my daughter’s School, my office, wife’s office)
My question for your guidance..
1. Can I take exemption for interest paid in last 5years considering my loan disbursement was in 2011.
2. Would there be any wealth tax that I need to pay as the cost of property is more 30lakhs.
Thanks in advance for your guidance.
Regards
Dear Tarun,
1 – Gurgoan house : Is it a joint-home loan? Is it that only your spouse is claiming the entire tax benefits?
2 – Are you going to declare chennai property as Self-occupied one? If so, you can not claim Prior Period interest. One can claim PPI only if the construction is completed within 3 years from the date of loan disbursement FY.
Wealth Tax in India has been abolished and removed from 1st April 2015 onwards.
Thanks Sreekanth for you response.
1. Yes, Gurgaon Property is a joint home loan. Since last 2years she only claims the home loan benefit on 1st House. I do not.
2. I have decided to give the Chennai property on rent. Besides the builder has delayed the construction and it is now more than 3years.
Dear Tarun,
2 – You can claim PPI if it is a let-out property even-though the construction period is more than 3 years.
Hi Shreenath,
Thank You for earlier info.Possession I received in Nov’15.
I checked and found I claimed interest before possession in last two financial year.
For let-out property I claimed interest for financial year 2014~15 and 2013-14.But interest claimed was 2lacs and 1.5lacs consequently.
Can I request remaining interest 1/5th of unclaimed interest amount along with 2015-16 financial interest this year in let-out property.
Kindly suggest
Dear Deepak..Yes you can claim.
Also read : Income from house property & Tax benefits.
Hi Sreekanth,
Your article was very informative.
I have a question, I had paid a pre-emi of Rs.75,000 between August 2010 to feb 2011, the property was handed over to me in March 2011. It’s a let out property and I have not claimed this pre-emi for tax exemption till now. So can I claim this pre-emi amount for tax exemption this year ?.
Dear Senthil,
I believe that you can claim final installment of PPI (out of 5 equal installments) this FY 2015-16.
Hi Sreekanth,
I have gone through your few articles which are very helpful.
I have query::
I purchased first home in Jan 12 and EMi started May 12.
Possession is in Nov 15.
After possession I have been staying rented due to factory location.
So I have given my first home on rent after possession.
My question:
1) Do I need to add rent received from first house as other source of income?
2) Interest paid in current financial year is 3.2lacs + 1lac (1/5 th of Pre-construction interest).Will I get tax benefits of complete 4.2lacs or only 2lacs?
3) Can I claim rent which I am paying even after possession?
Kindly give ur opinion
Thanks A Lot in advance
Dear Deepak,
1 – Yes.
2 – You can claim Rs 4.2 Lakh
3 – Do you mean HRA? Yes, you can..
Thanks A Lot Sreekanth.
Hi Sreekanth,
Sorry if these are being repeated, I tried best to find similar from above questions. I’ve got 2 doubts:
1. I’m working in Bangalore away from native. I’ve just completed construction an independent house (where my parents would live) at my native and I will get completion certificate from a registered architect, who drew the plan of house, this month (not from any local civic body). Can I use this as possession certificate to claim tax benefit on interest/principal for the financial year ending March’16? My employer has asked for possession certificate from builder as one of the document to be submitted before January end.
2. My home loan was sanctioned on August ’15 and I started paying EMI from the same month. I’ve a bank statement showing principal and interest components that will be paid till March’16 issued from bank. As I mentioned, I’ll get completion certificate from the architect on Jan’16. Getting occupancy certificate from the Panchayat (if they have such a document) might take another 1 month or so. Now, I understand that I can claim the full interest paid from August till March ’16 under Section 24 this year (Correct??). But from when can I claim the principal? :
(a) Only from Jan’16, as Aug’15 to Jan’16 might be considered as construction period and principal amount cannot be claimed then.
(b) From August’15, as construction got completed in same financial year.
Thanks in Advance!!
Also great work taking effort to answer each and every question. Really appreciate it.
Dear Rishi,
1 – Kindly note that PC is not mandatory for independent house. Yes, you can submit it and claim tax benefits for FY15-16.
Read:
Importance of Possession Certificate.
House property & Home loan benefits.
2 – You can claim both interest and principal repayments. Since both your loan disbursement & construction completion have completed in the same FY, you can claim as per normal rules. Kindly go through above links.
Hi Sreekanth,
I’ve 2 queries in the above case
1. What is the type of property, SELF or LET OUT?
2. I started the repayment and as per PROVISIONAL HOME LOAN INTEREST CERTIFICATE from bank expected repayment from 01/01/2016 to 31/03/2016 is ZERO, because the actual EMI starts from 01/04/2016.
How to get tax benefit for principal and interest paid during this period?
Thanks.
Dear Kranthi,
1 – Do you want to know what is Self occupied property & Let-out one?
2 – You can claim this Prior period interest (jan to mar2016) in 5 equal installments starting from FY 2016-17 along with your actual EMIs.
1. No Sreekanth. In tax submission we have to declare the type property as either Self occupied or Let out one, so in Rishi’s case he cannot declare the property as Self occupied because he not living in that house and he can’t declare it as let out also beause he is not getting any rent. What we have to declare?
2. As per your article if the loan taken date and construction completion date are in the same Financial year we can claim the interest and principle. Is it correct or am I missing something?
Thanks.
Sreekanth,
1. We’ve to declare the type of property in tax submission. In Rishi’s case he can’t declare the type of property as Self because he isn’t living there and he can’t declare it as let out because he isn’t getting any rent. My question is what type we have to declare?
2. As per your article if the loan taken date and the occupation date are in the same financial year we can get tax benefit for interest as well as principle.
I’ve taken the loan in Sep-2015 and it’ll be occupied in Feb-2016. I started the repayment from Nov-2015 (But as per bank I’ve to start from Apr-2016).
What I’m thinking is, I’ll submit the provisional tax certificate (till dec-2015) to my employer and at the time of efiling ITR I’ll give the total interest and principal paid and get the refund. Can I do like this?
Thanks.
Dear Kranthi,
1 – If parents are going to reside, he can consider it as a Self-occupied property.
2 – So, it is as good as claiming the tax benefits for the FY 2015-16. Yes, you can get the refund (if any).
Thank you so much Sreekanth.
Do you have joint home loan percentage declaration format?
Dear Kranthi..Do you want to change the percentage of ownership share?
Yes
Dear Kranthi..If you want to change the ownership share then you need to ideally update your Sale deed and then can claim tax benefits accordingly.
Hi Sreekanth,
I paid Rs 62500 as interest during my construction of house started from May 2015 to Sep 2015. I started paying EMI from Sep 2015 onwards. In this case, can I claim 62500 rupees as regular 2 lakh under section 24 head? or I need to consider this as PPI and divide this amount by 5, then 12500 to be claimed for the next 5 years ?
Thanks to clarify me.
Dear Naresh,
Very good question. (When did you take home loan?)
If both, date of loan taken and occupation date / completion date had taken place in the same Financial year, entire interest pertaining to pre-construction period can be claimed along with regular interest in the same assessment year. There is no need to claim the prior period interest in 5 installments.
Thanks Sreekanth for answering my question.
I took home loan by May 2015.
Hi Sreekanth,
In my case, date of loan taken and occupation date / completion date had taken place in the same Financial year, even though my company finance team divided the pre emi interest by 5 and resulted amount added to section 24 head.
I am defending with them. Can you help me on this, by giving the article/section number where it was officially given by Income tax department. I need this reference, please do the needful.
Hi,
I made a prepayment of my home loan amounting to Rs 5 lac this financial year. I have not been granted any possession so far. Can I claim tax benefit on the principal component of my prepayment this financial year?
Dear Shweta,
If you have not taken the possession of the property, you can not claim tax benefits on home loan.
Hi Sreekanth,
I have taken home loan in Oct 2012(FY12-13) for an under construction flat, I have been offered possession from my builder in Dec 2015 and my last loan installment drown was in Jan2016
I stayed in rented house till now.
My Queries are –
a) Am I eligible for availing loan interest component upto 2lacs or 30K only, based on the duration of completion of flat.
b) Can I claim HRA exemption for the period i.e. Apr 15 to Jan 16 in current financial year
c) Can I claim both HRA exemption(as in a) + tax benefit on interest paid during current financial year (for FY15-16)?
d) Can I also add PPI for FY12-13, FY13-14 & FY14-15, as i have seen my interest components for last 3 FYs have been more then 2lacs and this FY also it seems to be crossing 2 lac.
Regards,
Rakesh S
Dear Rakesh,
a) You are eligible to claim Rs 2 Lakh (if self occupied property).
b) Yes.
c) Yes.
d) PPI installment (1/5th for this FY) can also be added but again subject to overall limit of Rs 2 Lakh.
Thanks Sreekanth, Appreciate your help.
Sreekanth,
For pt a) above, how 3 years from the date of home loan taken is calculated? as I have taken home loan in Oct12 and 3 year completes in Sep15, so i thought i wll be eligible for only 30K…
For pt d) above, Suppose my home loan interest component is crossing the limit of 2 lacs for current FY as well as for coming 4 FYs, does that mean PPI adjustment is not at all coming into picture in tax calculations (as per the current tax rules applicable) ??
thanks n regards
Rakesh
Dear Rakesh,
1) It is from the end of the financial year. In some court cases, it has been decided based on the last loan disbursement date too.
2) unfortunately yes.
thanks Sreekanth,
hello dear
i have purchased a house on 21/10/15 through loan. me and my wife equal partner on this. 50-50 ratio but interest amount is deducting from my wife account. we both r in govt service. totoal annual salary of my wife is 576000/-. saving near about 50000 thousand. interest of loan is 10000/- per month . how to calculate tax plz tell me
Dear varinder,
Suggest you to submit joint-account for EMI deduction. In the current scenario if EMIs are getting deducted from your spouse account then only she may be eligible
to claim tax deductions on home loan repayments.
For calculation of tax liability, kindly visit this link.
I have taken home loan on Aug. 2013 for under construction proposerty & got possession on Oct. 2015.
Interest paid details are as below:
1. Interest paid from AUG. 2013 to MARCH 2014=Rs. 184600
2. Interest paid from APR. 2014 to MARCH 2015=Rs. 383583
3. Under Construction Total Interest Paid till march. 2015=568183
4. Interest paid from APR. 2015 to MARCH 2016=Rs. Yearly –Rs. 411999
in FY 2015-16, I will be getting exemption of 2 Lac for home loan interest as i have paid total interest of 4.11 lac in this financial year.
However during under construction period i have paid interest of Rs. 5.68 lacs for which will I get tax exemption from this year of equal 5 year or 20 % each year?
(20% amount of interest paid wave of from income tax deduction every year from March. 2015=113636/-)
MY Accounts team is saying I can not avail exemption more than 2 Lacs
Dear Nilesh,
The prior period interest installment plus ‘normal interest’ is allowed to the extent of Rs 2 Lakh only in-case of a Self occupied property. There is no such restriction if the property is a ‘Let-out’ one.
hi Sreekanth,
nilesh will get the tax return of 113636/year right through ppi every financial year.???
what if the property cost is 69 lakhs does he still qualify under this circumstance.??
thanks
akshay
Dear Sir,
Thanks for such helpful & interective bolg. I got loan approval in March 2012 and possession in Dec 2014. My interest paid details are:
2012-13 = 97800
2013-14 = 146000
2 questions:
1- I forgot to claim above mentined interest rebate after possession, what are my options now for the lost year? Can I add last year 20% + this year 20% and take total 40% rebate this year or Can I take 20% each year
starting from FY 2015-16?
2- How about the interest paid between April 2014 & Dec 2014? where do I get benifit for this?
Regards!
Gaurav
Forgot to mention, self occupied property.
Dear Gaurav,
1 – One can not carry forward the previous years’ PPI installments. You can only claim this year installment of PPI.
2 – You could have claimed it in FY 2014-15.
Dear Sir,
Thanks for feedback. So this means I cannot even consider 5 years starting from this FY, it’ll only be considered from my date of possession, right?
One mor ques. – If I re-paid prnciple amount of 5 lac each in last 2 FY but got the tax rebate for max 1.50 lac each year so is there any clause to cliam rebate on balance amount in coming FY?
Regards!
Dear Gaurav,
Prior Period Interest : If you have missed claiming previous year installment, you can not carry forward it and claim in this year or in future. Say you have missed the fist (1/5th) installment, you can not claim it again. However you can claim 2nd installment in the current financial year.
Regarding principal repayment too, you can not carry forward the unclaimed or balance amount to future Financial years.
I have booked a flat in Noida authority . I have taken a home loan in March 2007 . The possession of flat was given in Dec’ 2012. I have been paying EMIs since March 2007. I have not claimed any housing loan benefit so far. Please suggest how Can I do it now for under construction period. How much would be limit and what documents are required to claim benefit.
Dear Neeraj,
If this is a self-occupied property, you can claim tax benefits on interest payments of up to Rs 30,000 only as the construction period is more than 3 years.
Sreekanth Reddy Sir,
I have taken home loan in the year 2010. The project was completed in the year 2015.
Leaving apart the construction period interest, can I claim the interest from the next financial year i.e. 2016-2017. I heard that, if a project was delayed beyond the 3 years the raised interest exemption of Rs.2 lakhs is not allowed but only the old exemption of Rs.30,000/- is only allowed.
Please advise me.
Dear Srinivasa..Yes that is correct and applicable on Self occupied properties.
Hello Sreekanth,
Is the 3 year cap for claiming tax rebate on PPI applicable even for the properties that will be given out on rent? I was hoping not. In which case I was thinking that I can claim the full interest amount paid in the financial year + the 1/5th of the PPI amount (irrespective of the under construction period) at its full without any cap (of 1.5 or 2 lacs).
Please let me know.
Thanks,
STS.
Dear Sashi..The rule is applicable only for Self-occupied properties.
Hi Sreekanth,
I have bought second home in different town in 2015 and is under construction and the possession is on April 21016, the total EMI I have started paying from Sept 2015 should I claim for tax benefit for interest I am paying? and how much I can claim. I have provision certificate showing as 81000/- interest that will be payed till March 2016. Please help me if I can claim this interest along with my first home loan.
If yes any document should be given to employer.
Dear Shrinivas,
If the possession is going to happen in Apr 2016, you can claim income tax benefits on that home loan from FY 2016-17 only.
The prior period interest for Sep 2015 to mar 2016 duration can be claimed as 5 equal installments along with the regular EMIs paid for apr 16 to mar 2017.
Read:
Income tax investment proofs.
Income from house property & tax implications.
Thanks.
Dear sir,
very informative articles and more important the questions asked and your clarifications…!
I got answered only through various qs and ans posted.
keep it up!
neeraj chourasia
Happy to know that you find my articles useful. Thank you & keep visiting 🙂
Hi,
“Can I claim Principal component that is repaid during the pre-construction period? – Principal component of your EMIs paid during prior period is not eligible for any tax deduction.”
But in some comments you are saying that Principal Component(house whose possession is not yet taken OR under construction house) can be claimed against tax deduction under 80C.
Please clear this doubt.
Dear chandra,
Prior Period Principal can not be claimed. Kindly point me to that comment, if I had mentioned that it can be claimed, let me correct it.
Hi Sreekanth
This article indeed help to know so many things for rebate on housing loan.
I have a query on the max amount of total interest paid during the prior period.
My Prior period is 2 years; 2009-10 & 2010-2011; I got the possesion in 2011-12 so can claim for interest paid in 2009-10 & 2010-11 till financial year 2015-16; but is there a maximum amount of interest paid in prior period.
I paid 2.7 lakh interest in 2009-10 and 2.4 lakh interested in 2010-11; Can I claim (2.7+2.4)/5 = 1.02 lakh in 2015-16 as interest for previous year; total amount for year 2015-16 will be within 2 Lakhs after inlcuding interest paid in 2015-16.
Finance department in my company is saying, one can not exceed 1.5 limit for year 2009-10 and 2010-11. so according to them i can not claim more than (1.5+1.5)/5 = 60,000 as previous year interest.
Thanks & Regards
Anand Mishra
Dear Anand..I believe that your point is correct, you can claim up to Rs 2 Lakh for FY 2015-16.
Hi,
I need one clarification for calculating 3 years from the loan disbursement. As per statement, the tax benefit of Rs. 200000 can be claimed only when construction/possession should be taken within 3 years from the end of the financial year in which loan is taken.
Now if I took the loan in June-2013 and get the possession in January -2017 then am I under 3 years construction rule or not?
Loan taken in FY- 2013-14.
3 years calculation should start from FY 2014-15 (i.e. April-2014) and ends in FY 2016-17 (March-2017)
Am I correct in the logic calculation ?
Thanks,
Jitendra Tiwari
Dear Jitendra,
So, you have time till mar 2017. If you can get possession of the property before this, you can claim tax benefits as per normal rules.
Hi Sreekanth,
Indeed a nice article to cover up the overall concept. I have a query, would be glad if you could help me out. I have booked a flat in 2012 and taken a loan in 2013, whose pre-EMI started in Sept 2013. Now the flat is completed and I have received the possession certificate in Aug 2015 and staying in the house. (not rented out).
Till FY14-15, I have not claimed any tax benefit on the loan taken as I understand it can’t be claimed while property is under construction.
As per my understanding, I can claim for tax benefit on principal paid for FY15-16, u/s 80c and interest paid for FY15-16 u/s 24(b). The pre-EMI interest paid for FY13-14 and FY14-15 (combined) can be claimed in 5 equal instalments along with the interest in the current FY15-16. Hope my understanding is right.
Just let me know if below documents are sufficient to submit:
1. Possession certificate issued by builder (Aug-2015)
2. Provisional Certificate FY15-16, from bank mentioning the principal and interest amount for FY15-16
3. Bank statement for FY13-14, FY14-15, FY15-16 (till date) to claim pre-emi
Let me know if sale deed (Aug 2015), is also required to be submitted for claiming the benefit or possession certificate is enough for this.
Dear Iftikar,
What is the duration between your possession date and loan disbursement date?
Your understanding regarding the tax benefits is correct. But kindly remember that the aggregate limit u/s 24 is Rs 2 Lakh (for self-occupied property).
Do you have home loan account statements for previous years? Sale deed copy may not be required.
Hi Sreekanth,
Thanks for your feedback.
Duration between possession date and loan disbursement date is 2 years.
Loan Disbursed: Sep 2013
Flat Possessed: Aug 2015
Yes, I do have home loan account statements for previous years.
Dear Iftikar,
If the duration is more than 3 years, one can claim up to Rs30,000 only (on interest payments).
Ok Thanks. Since mine is within 2 years, so I suppose, I can claim benefit on X amount in this FY 15-16
X= Interest paid/payable in FY15-16 + 20% of total interest paid in FY13-14 and FY14-15 combined
Considering X being under 2 Lakhs.
Dear Iftikar ..Yes, you are right.
Dear Sreekanth,
Thanks for your feedback. I have one final query…sorry to bother you…
Even if I got the possession in Aug-15, I can see 90% of the loan amount is disbursed so far to the builder, remaining 10% yet to be disbursed by bank. Hope, this will not be a problem while claiming for tax benefit.
Dear Iftikar..I believe that it shouldn’t be an issue.
Hi Sreekanth,
We bought a flat recently and registration got completed in Aug’15 and possession was Nov’15. Kindly help me with below queries:
I have xerox copies of the sale/agreement and stamp charges.
1. What all documents I need to submit for my IT proof submission?
2. What all should I require from the bank?
Thanks,
Priya
Dear Priya,
1 – Generally it depends on your employer’s policies. They may ask you to submit possession certificate & home loan account statement.
2 – Home loan account statement.
Thanks Sreekanth.
My employer asked “INTEREST ON HOUSING LOAN” and “PRINCIPAL LOAN REPAYMENT FOR HOUSING LOAN” documents to submit. Can I get these two from bank?
Also, Home loan account statement means provisional home loan interest certificate?
Please clarify them.
Thanks,
Priya.
Dear Priya,
Generally the home loan ac statment or provisional loan certificate will have these details – INTEREST ON HOUSING LOAN” and “PRINCIPAL LOAN REPAYMENT FOR HOUSING LOAN” .
Thanks a lot Sreekanth sir!
One more – My CTC is less than 5 LPA but we have a flat (joint property). Can I show the loan certificate for my IT proof submission?
Please suggest what is best for us.
Thanks,
Priya
Dear Priya,
Yes you can submit.
Kindly read : Joint home loan & Income tax benefits.
You are the income tax guru 🙂
Every query of mine is answered. Very nice blog indeed!
Thanks,
Priya
Hi Sreekanth,
I purchased a flat in March 2015. I availed stamp duty and registration benefit in last FY. My loan started from APR-2015. I am getting possession in month of MARCH-16 or APR-16. From APR-15 My EMI is started and i am paying to bank. can you help me how i can avail benefit for tax? Can i claim Principal this year? I have to submit tax document before 10 Jan-16.
Thanks,
Appasaheb
Dear Appasahe,
The payment of expenses like brokerage/registration charges etc and possession of the house must be in the same financial year for claiming expenses.
Deductions can only be claimed in the year of actual payment. Suppose you bought house and paid Stamp Duty and Registration Charges in December 2015, than you can claim deduction for these expenses u/s 80C in the financial year 2015-16 only.
If you get possession in this FY then you can claim tax benefits else you can start claiming tax benefits from FY 2016-17 only.
Hi Sreekanth,
I currently have 2 home loans. One home loan is for a flat purchased in 2004 for which I am claiming tax benefit ( for interest under section 24 b) and the principal component benefit under section 80 C. I am showing this property as self occupied.
The 2nd home loan taken was for an under construction flat. The home loan got sanctioned in March 2013 and was paying pre-EMIs from April 2013 for 6 months. After September 2013 have been paying regular EMI’s till date .The possession letter of the Flat will be given in Jan 2016 by the builder. So we are getting the possession of the flat within the period of 3 years of availing the housing loan. Since I am already showing the flat purchased in 2004 as self occupied property, how do I avail the tax benefit for this year for the 2nd flat specifically for the interest component
Ideally the 2nd flat has to be shown as let out property but since the possession will be given only in Jan 2016, how do I claim tax benefit by showing notional rental income when the flat will be ready only in Jan 2016
Also can I claim the principal benefit for the 2nd flat as well. The principal component for the 1st flat comes to around 2,26,000
Thanks & Regards,
Vivek Thakur
Dear Vivek,
You can show notional rent for jan to mar 2016. You can claim tax benefits on total interest paid (on 2nd loan) in this FY and principal component too under section 80c subject to aggregate limit ie Rs 1.5 Lakh.
You can also claim prior period interest (1st installment).
Kindly read : Income from house property & Tax implications.
Hi Sreekanth,
Thanks for the response. You have mentioned that you can show notional rent from Jan to Mar 2016 for 3 months.
In this case do I have also have to deduct 30% from the total Notional rent for 3 months.
Also in that case the interest paid for the FY 2015 to 2016 will have also to be deducted to arrive at Income from house property
Assuming the Notional Rental value comes to Rs 21,000 for 3months
30 % standard deduction would be 6,300
Also total Interest paid for FY 2015 to 2016is Rs 181716
Hence the income from house property would be calculated as 21,000-6300- 181716 = -167016
Also for claiming the prior period interest (1st installment) please let me know if my calculation is correct. I ma taking the total interest till FY 2014 – 2015 as possession is given in FY 2015 to 2016
Total Interest paid for FY 2013 to 2014- 159174
Total Interest paid for FY 2014 to 2015-185679
Total Prior Period Interest is Rs. 344853.
The amount of 68970 can be claimed in 5 equal installments from FY 2015-2016 onwards for next 5 years.
So prior period interest (1st installment) in FY2015 to 2016 would be Rs 68970
Please let me know if the calculations for interest given above are correct as per my understanding of your reply
Regards,
Vivek Thakur
Dear Vivek..Looks ok to me. You can also deduct municipal taxes if any paid.
However, advisable to consult a CA too.
Hi Sreekanth,
I am staying in rented house and paying EMI for home which is completing in Jan 2016. So in this can i claim interest benefit for complete FY2015-16 along with HRA till Jan 2016.
Please clarify.
Thank you
Dear Rakshit..Yes, you can claim regular EMIs + PPI installment (if any) but subject to overall aggregate limit.
what is the formula to calculate tax benefit for a home loan where the property is on rent for a service employee?
Dear Anu,
Kindly read : Income from house property & Tax implications.
I have a home loan for a property that is let out. How do I calculate the teax benefit under sec 24 b
Hi Sreekanth,
Our home loan got sanctioned in July 2012 and we are paying pre-EMIs. The house is still under construction and hopefully, we may get the completion certificate by April or May 2016. In such a situation, since it is more than 3 financial years since we have availed the home loan, will it be possible to claim tax benefits after we get the completion certificate? Or are we going to lose out on claiming tax benefits on the pre-EMI interest because we are still not in possession of the self-occupied house after three years of availing the home loan? Is there any way to avail the tax benefit, let’s say by refinancing the home loan?
Thanks & Regards,
Lakshmy
Dear Lakshmy,
If the possession of the house is received more than three years from the end of the financial year in which the housing loan was taken, then only interest of Rs.30,000 is deductible each year.
But, if the substantial part of the loan disbursement is within the three-year time limit, then you can claim tax benefits. Say if your last loan disbursement date (installment) falls within 3 year period then you can claim tax deductions.
Kindly note that these rules are applicable for Self-occupied property only.
Hi Sreekanth,
Currently, I stay in Bengaluru in a rented house.
I have one house in Pune. I am planning to give it on rent from February 2015.
According to my understanding, I can claim HRA and Interest component in Home Loan repayment. Further, I will have to pay income tax on the rent that I will receive.
I am not sure about ‘Principal Component in Home Loan’. Can you please whether I will be able to take the benefit of IT exemption for this?
Regards,
Amit
Dear Amit..Is it feb 2015 or 2016?
The principal component can be claimed under section 80c.
Kindly read:
IT declaration & Income tax proofs.Income from house property & tax benefits.
Dear Sreekanth,
Thanks for the response!
Sorry for the typo.
It is February 2016.
Regards,
Amit
I am due to take possession of m under construction house on Jan 30 of 2016 . Could I still go ahead and submit proof of interest outgo to my employer indicating property as self occupied, possessed even though proof submission deadline is 15 Jan…..
Dear Chaitanya,
It is better you wait till you get the possession certificate from your builder. Check with your employer if they require completion & possession certificate copies besides home loan account statement?
In case if you miss jan 15th deadline and get possession certificate before say mar 31 216, you can still claim tax benefits along with PPI installment while filing your ITR.
Hi,Sir Happy New Year,
i am taking a home loan in Sep-2014 of 26 Lacs for purchasing under construction properties,& i am paying only intrest throgh pre emi,since Nov-2014,now i get possesion of property in mar-15,so how can avail tax nenefit,
i am paying intrest as below
Nov-2014 to Mar-2015_92500/-
Apr-2015 to Mar-2016_252000,
pleaseguide
Dear bhupendra..Is this a self-occupied property?
Kindly read:
House property & Tax benefits.
Self occupied property & Tax implications.
“Happy new year to you too” 🙂
Hi Srikanth, first of all wonderful replies and wish u a very Happy New Year.
I’m already claiming tax benefit on one Home Loan interest, self-occupied, of Rs 1,20,000 appx per year under Sec 24. Now, I have taken second Home Loan for under construction property. Loan taken Apr 2014. Likely Possession in Dec 2016. Approximate Home Loan Interest element in Second Home Loan is Rs 3,50,000 per year in the PPI term.
1. Can I get tax rebate on both Home Loans every year ?
2. If Yes, Can I claim PPI amount as per procedure over next 5 years ? If Yes, can you suggest the Procedure ?
Thanks and Regards.
Dear Deepak,
Happy new year!
1 – Yes, you can get but after taking possession of the second home. You have to treat either of the properties as self occupied and the other one as Let’out property.
2 – You can claim PPI after taking the possession. Kindly refer to the article for the detailed procedure to calculate Prior Period Interest.
Sreekanth
I got possession in Dec 15, from april 15 to nov 15 , I paid rent, So can I claim HRA for Apr to Nov as well as loan benefit?
Dear Vikas..Yes you can claim both.
Hi Sir ,
Registration agreement builder with build: – 20/12/1011
Loan agreement with SBI Bank: – 24/02/2012
Got Completion certificate from builder -17/02/2015
Subject :-Completion of 100% work of shops and flats for Building D
This is to certify that work of shops and flats for building-D has been completed 100% ,at Proposed “****” as per commencement certificate No.CC/***** ,Dated 26th June 2014 in accordance with the sanctioned plans .
it is ready for possession for furniture fit-outs only…
Final Possession letter on :-29/06/2015
So now can I claim current (15-16 ) home loan interest plus last three years interest / 5 years ,
for Total 2,00, 000 benefit ?
On basis of Completion certificate shall I claim complete 200000 amount for year 2015-16 , or I am eligible only 30000/- as the Final Possession is after 3 years of loan agreement ?
Thanks
Suresh
Dear suresh,
If the construction has been completed after 3 years of loan disbursal then you can claim max Rs 30,000 on interest payments.
You may also check this with your banker.
(The loan can be said to have been fully disbursed only after the last installment, one could consider the year of the last installment as the loan disbursal year for the purpose of tax calculation)
Thank you Sreekanth!
I have made Loan agreement with SBI Bank on 24/02/2012 and the first disbursement was on 4th April 2012 after completion of foundation and the was from bank .
Builder asked us slab wise payment as 1st , 3rd ,5th ,7th ,9th ,11th slab completion with demand latter ,I use to submit demand latter to bank and bank was doing the payment to builder.
As per bank rule first 18 months I paid only interest no EMI and EMI started in Oct-13 and the last payment done to builder from bank was oct-13 after completion of 11th slab .
In the month of June -15 I got possession and I paid remaining final settlement amount including maintenance and 2 % remaining amount from my saving account.
Kindly let me know how can I consider the calculation tax benefit ..
Thank you
Suresh Dulange
Dear Sures,
Kindly note that EMI has two components i) Interest & ii) Principal.
If this is the scenario then you can claim tax benefits for FY 2015-16 Plus 1/5 th of prior period interest amount (but subject to the aggregate limits).
Dear Suresh,
The last loan disbursement date is less than 3 years from the completion date. So, you can claim tax benefits for this FY 2015-16 along with the 1st installment (ie 1/5th) of prior period interest but subject to overall aggregate limits.
Thanks lot Sreekanth !
Hi Shreekanth,
I have taken Home loan.
Start date: June-2013
Possession : March -2016
So I am paying Principal and Interest both; since 2013. So am i Eligible for claiming the TAX benefit for the same in this FY 2015-2016?. Currently i am living in a rented home. However actual possession is to be made by March 2016.
Thanks
RRP
Dear RRP,
If you occupy the house before Apr 2016, you can claim tax benefits.
Dear Sreekanth,
Will this be under Let out property or self occupied.
Best Regards,
RRP
Dear RRP..If you are going to occupy it then it has to be treated as Self occupied Property (SOP).
Kindly read : SOP & Tax implications.
Dear Sreekanth,
I have taken home loan from July 2013, I am getting possession by Jan 2016
I will stay in rented house till Dec 2015
Questions
a: Can i claim HRA from Apr 15 to Dec 15 in current financial year
b: Can I claim both HRA (as in a) + tax benefit on interest paid during current financial year (for FY15-16)?
c: Can I also add PPI (FY13-14 & FY14-15) to a. and b.
Regards,
Prasanna
also if my current financial year interest is already exceeding 2 lakh limit, can I start claiming PPI from next year till 5 years ?
Dear prasanna..No.
Dear Prasanna,
c – Yes.
Hi Srikanth,
I have taken Home loan.
Start date: Jan-2011
Possession : March -2016
So I am paying Principal and Interest both; since 2013. So am i Eligible for claiming the TAX benefit for the same in this FY 2015-2016?. Currently i am living in a rented home. However actual possession is to be made by March 2016.
Thanks
Chandan
Dear Chandan,
As the time taken for the construction is more than 3 years, you can claim maximum of Rs30,000 (interest payment) as tax exemption.
Hi,
I have purchased a flat in March 2013. I took home Loan in Jan 2014. This Flat is still under construction .I will get possession in Nov 2016. Right now I am paying EMI for this Home Loan. EMI Paid by me is only Interest.
Can i get Income tax rebate on this Ineterest Part Paid by me in FY 2015-16.
Dear Narinder..As the construction is not yet completed, you can not claim tax benefits for FY 2015-16.
hi sir,
I have taken a house loan of 18 Lakhs in 2014 Nov but the registry of my house is on my mothers name
but in the loan i m the co-owner .my home will complete in jan 2015 can i file the tax benefit or else what i have to do for this.
Dear Haider,
As you are not a co-owner or owner of the property, you can not claim tax benefits on home loan.
You may get your name added to the sale deed or get a gift deed done on your name (gift can be for the entire property or a portion of it)
thanks for help .Can you tell me how the process of gifting 50% portion can be done .Means what i need to do that . do i need to add my name in sale deed or it can be done with simple notary stamp .
Dear haider,
You can get your name added in Sale deed or you can get ownership or co-ownership share through Gift deed.
The costs associated with Gift deed can be low.
Dear Sreekanth,
Thanks for the post and its really helping us understanding the things but still we are lagging some where as I am not financial guy and I am a tech guy…
I have few questions. Can you clarify?
1. I have purchased a flat (Dec 2015) and Possession of the same will be in June-2016
2. Part Loan has been sanctioned and EMI will get deducted from Jan – 2016 onwards.
3. I am said by the lender (LIC HFL) that only the interest will be deductible initially (Probably for 4 to 6 months) and once the entire payment is done, Principal also gets deducted.
My worry is
1. Shall I Claim the HRA as well as Interest tax exemption – As i said possession will be in June 2016
Please help…
Dear Rajesh,
For FY 2015-16, you can only claim HRA.
For FY 2016-17, you can start claiming tax benefits (both prior period installment + regular ones, subject to aggregate limit).
Kindly read : Importance of Possession certificate.
Hi Shrikanth,
Thanks for all the valuable info on this website. I have a question. Your help is needed.
I have to submit my Proof of investment (POI) in the first week of January, 2016.
Earlier, I had declared the following (based on which tax was deducted from salary.)
flat – date of possession : as august 2015.
interest amount ~ 2,00,000
principal amount ~ 50,000
Note:
1) I am currently staying in a rented house. (as the new apt – has no lift operational yet. it will happen by Jan end).
2) I will be moving to my new apt on 1st february, 2016.
3) house is already registered in my name.
Can I claim both HRA and tax benefit?
or HRA till august (as i had declared earlier) – and from august till march 2016 – the interest & principal
I am confused. Please suggest a solution.
Regards,
Sumedha
Dear Sumedha,
When did you take home loan?
Yes, you can claim both the benefits in this FY.
Hi Sreekanth,
I took the home loan in June 2014.
The first loan disbursement happened in July 2014.
I had around 1 year holiday – repayment period. I started paying EMI from June 2015. So till today I have paid – 7 EMI’s.
I will be moving to my new home (apartment) on 1st February, 2016.
So, for this financial year – i.e. 1st April 2014 to 31st March 2015, Can I claim as below:
a) HRA till January (inclusive).
b) Home loan interest repayment (whole year).
c) Home loan principal repayment (from june till date) ?
Can you please clarify. I am getting confused here.. I am really bad at this financial stuff.
Your help will be really appreciated.
Thanks again,
Regards,
Sumedha
Dear Sumedha,
a/b/c : Yes.
Hello Sreekanth,
Its a very helpful article. Thanks for this.
I have couple of questions:
a. I have availed under construction home loan since June 2012 (Agreement happened in March 2012) and possession has been offered in May 2015. Do i qualify in 3 year limit?
b. My Prior period interest outgo until 31-3-2015 is Rs 8 lakhs. so where should I show this post dividing by 5? is it under house property? As its vacant I have shown rent as Rs 6000 per month and deducted maintenance and HL interest paid, here do I need to add this PPI also (8/5=1.6 L per year)?
Thanks in advance..
Regards
Venkatesh
Dear Venkatesh,
a – You got the possession within 3 years after loan disbursal, so you are eligible for claiming tax benefits.
b – It can be shown under Section 24 while calculating income from house property. Is this house a let-out property? Are you going to show rent receivable from May 2015 to Mar 2016?
Hello Sreekanth,
Thanks for your quick response.
Actually we haven’t yet occupied flat due to some pending work from builder and I’ve to look school for my kid’s hence thought to shift in March 2016. As per section 24 I am showing nominal rent which is going on that area and including that in my income.
Please suggest do we any norms where I can find rent government fixes rent at each area?
Thanks in advance.
Regards
venkatesh
Dear Venkatesh,
Suggest you to use ” ***** Rent Control Act ” as search word on Google search and you get some details about rents. (**** replace them with state name)
Hello Sreekanth,
Thanks for your prompt reply.
Bank Manger is not ready to share the interest certificates of previous years to claim PPI, she is asking to share the proof from Income tax department where they mention clearly that we can claim this year tax.
1. If Flat possession happens in any month of Fy2015-16 then interest paid from April 2015 – March 2016 can be considered. As per her she is giving statement from the possession date in my case its May 08, 2015 and she showing interest from June 2015-March 2016
2. Previous Years interest paid certificate- she claims I can opt only next year, so can’t give previous 3 years interest certificate,
It could help me if you share Income tax official page number where I can show above both and get the required certificates.
Thanks in advance
Venkatesh Deshpande
Dear Venkatesh,
Kindly go through the PDF doc which is available on incometaxindia.gov.in website. (Refer 2nd page of the doc)
Click here to download.
Hi Sreekanth,
Thanks for your wonderful information regarding home loan tax exemptions details.
I have one concern :
I booked a flat in Oct’15 and did the registration on Nov-27th 2015 and my EMI starts on Dec-05 2015 for Rs.23575.
However I will get the key handover of my flat only after May’15.
Is there anyway I can show tax savings w.r.t Registration charges and Pre EMi which I am paying till Mar’31st of 2015 ?
Thanks in advance.
Dear Gopi..Did you get possession or occupation certificate? Or will the builder issue PC in May 2016? (Is it may 2015 or 2016)
Kindly read : Importance of PC.
Sorry Sreekanth I have wrongly mentioned . The builder will hand over the flat to me by May’2016 only.I will received the Buiding certificate only by June’16.
If I show MOD and registration charges which comes around 30K under section 80C. is it ok for this Financial year??
Dear Gopi,
In that case, kindly note that you will be able to claim tax benefits from FY 2016-17 only.
Also, the payment of expenses like brokerage/registration charges etc and possession of the house must be in the same financial year for claiming expenses.
Deductions can only be claimed in the year of actual payment. Suppose you bought house and paid Stamp Duty and Registration Charges in December 2015, than you can claim deduction for these expenses u/s 80C in the financial year 2015-16 only.
Dear Sreekanth,
Thank you so much for your timely reply and helping us all in understanding things 🙂
May god bless you!
Indeed best article on web i came across with such simple explanation.
One concern please help-
IN case of Let out property, Construction completed will be Feb-2016.
So prior period will be till March-2015. (interest paid till this will be covered in 5 years)
Interest paid from April2015 to March 2016, should be booked as loss under section 24 and 80C.
But what about the rental income, as it will only start from Feb-2016.
I read that rent must be declared as per market value. Does this mean that April2015 to Feb2016 when construction was still on, i have to show rent though i have not earned any.
Please help to conclude on this.
Dear Vishal,
If house is let-out for two months ie partly let-out in FY 2015-16, then you can consider actual rent receivable for feb & mar 2016 for calculation purposes. Before this period , the property is not let-able.
Hi Sreekanth,
Thanks for the article. Few questions –
1. Do we need to include Tax savings certificate while submitting the receipts for all previous years if we are claiming pre-emi interest for tax benefits? And do we need include all those tax certificates until the 5 year installment is complete? For instance – do I have to include the tax savings certificate (provisional statement) in FY16 – 17, FY17-18, FY18-19, FY19-20 too?
2. I read somewhere that Principal repayment of the loan/capital borrowed is eligible for a deduction of up to Rs.1,50,000/- under section 80C. Is the Princial component also divided into 5 equal installments for prior periods?
Thanks,
Bunti
Dear Bunti,
1 – Do you mean to say that ‘is it required to attach the loan certificate along with Income Tax Return’? If so, it is not required.
2 – Principal component of ‘prior period’ can not be claimed.
Kindly read:
Investment proofs to be submitted to employer.
Home loan & Tax benefits.
Hi Shreekant,
I bought under construction flat in feb 2015 paying loan (pre emi) since april -2015. i am expecting to get flat in feb 2016. i have not shown registraction and other amount in last year claim.
how can i claim amount now? as per our company we have to provide all document by 20 jan 16
-Vikas
Dear Vikas,
Has the property been already registered on your name? (date of registration?)
Even if you do not get possession by 20 jan, you can claim tax benefits while filing your ITR.
I have bought a house in July,12. I now plan to sell the property as builder is asking for very high charges . I have paid 10 Lakhs as interest in past 3.5 years.
I want to know , if i sell it before taking possession can i still get any rebate on tax. If not, if i take possession and then sell it , can i get rebate of Pre EMI interest benefit for 5 years or only 1 year.
How can i minimize this loss. Also, i will be selling the property at the 1.5 lakhs lower than the rate at which i bought it.
Dear vandita,
Has the property been registered on your name? Is it still an under-construction property?
The builder has offered the posession but i havent taken it yet.
Dear vandita,
If the construction of the property is completed, registered on your name & have a possession certificate then you can claim
tax benefits fro this FY. But once you sell it, you can claim the remaining installments (prior-period interest amount).
Is registration compulsory or by just having the Posession certificate and selling it without posession will not help?
also, u have written – “But once you sell it, you can claim the remaining installments (prior-period interest amount).” that means i can still claim Pre Emi benifit for remaining 4 years as well even if i sell?
Dear Vandita..Sorry for the typo error..kindly read it as “you can not claim….”
Registration & transfer of ownership on your name is mandatory to claim tax benefits.
Sreekanth!
You mentioned that: “Kindly remember that the aggregate limits under Section 24 are still applicable. The prior period interest installment plus ‘normal interest’ is allowed to the extent of Rs 2 Lakh only in-case of a Self occupied property. There is no such restriction if the property is a ‘Let-out’ one.”
In this “There is no such restriction if the property is a ‘Let-out’ one” what this sentence means. If you give it for rent, then we can claim for any amount for tax reduction For Ex: if you pay housing loan interest of 5 lakhs that this total amount we can claim??
Regards,
kotesh
Dear kotesh..yes, provided the house is given on rent.
Hi,
I am planning to buy apartment in launch phase in Bengaluru. They will be starting construction in Jan 2016 and planning to handover in 42 months (3 and 1/2 years) from then. I am planning to pay first installment by myself.
1> Regarding Under construction TAX benefits would it be better to take HOME LOAN during next Financial year means April 2016 onwards ?
2> If so would I get total Interest component TAX benefits (i.e 1/5 year year), say project is completed by March 2019.
3> To avail this benefits, Would it be better to start actual EMI payment or PRE-EMI ?
4> Would actual EMI also be considered for Under-construction Tax benefits ?
5> If there is a co-applicant then can he/she enjoy partial TAX for Under-construction interest component Tax benefits ?
6> Is there any maximum limit set for Interest component during Under-construction period (incase house is let out immediately) ?
Please help me out .
Thanks and Regards,
Anup
Dear Anup,
1 – It depends on your income & current financial situation.
2 , 3 & 4- You can not claim tax benefits till the time you get the possession. Kindly go through the article again.
5 – Kindly read : Joint home loan & IT benefits.
6 – If the property is under-construction, how can you LET it out?
Thanks for this nice article Sreekanth. I availed loan on Aug’13 and I will be getting the completion certificate of my under construction property on Feb’16. You may not be able to understand my questions exactly as I am very poor in accounts, but please help to clarify below queries,
1. Whether in this Financial year, I can get tax benefit in 80c for the principle amount which I paid between Apr’15 – Mar’16? or I can claim only Feb’16 & Mar’16 principle as I will get completion certificate in Feb’16 only.
2. Same for Interest also, as per your article I understand that I can avail tax benefit for the interest between Apr’15 – Mar’16 and for previous months interest I will follow “How to calculate Prior Period Interest”… Am I right?
3. Relating to question 1 – If the Principle amount tax benefit can be claimed only after the possession date, is there any way to get tax benefit for the remaining principle paid during this financial year.
4. Is there any way to claim interest for the Principle which I paid in previous Financial years?
Dear Vignesh,
1 – You can claim only Feb & Mar months’ Principal component of your EMIs.
2 – Yes, you understanding is correct.
3 – No
4 – I did not understand this query. Kindly rephrase it.
Hi Sreekanth…. Thank you very much for your prompt reply.
My unit is ready to occupy and builder provided no due certificate for my unit as I paid the entire amount. However other outer construction works such as STP are ongoing, which will take couple of months to complete. Builder informed that they will provide final completion certificate after 2~3 months, which may not be provided in this Financial Year. Whether I can claim the tax benefit in this Financial year with the No due certificate provided by the builder?
Dear Vignesh..You have to get occupation / possession certificate to claim tax benefits.
Kindly read: Importance of OC/PC.
Thank you.
Hi,
I had taken a home loan in Jan2012 for purchase of under construction flat. the builder gave the offer of possession in feb2015 but issued the possession certificate in May2015 and the Registration of the property was done in May 2015 after possession certificate was issued.
I had claimed deduction in my ITR for AY 2015-16 under section 24d of IT Act for the interest paid for the FY 2014-15 along with 1/5 of the pre construction period interest on home loan for the period jan2012 till March 2014 . The property was self occupied. Is it correct.
Pls also apprise whether I can avail pre construction interest on FY 2015-16, 2016-17, 2017-18, 2018-19 even if I prepay the entire home loan in the next 25 Months.
Dear Vivek,
Yes, you are right in claiming the tax benefits. As it is self-occupied the overall aggregate limit (for interest payment) is Rs 2 Lakh.
If you sell the property you can not claim tax benefits.
Also, if you sell the property before 5 years (counted from the registration date), tax benefits that were claimed will be revoked. Kindly read : 8 ways you could lose your income tax benefits.
Hi ,
Fantastic blog , Thanks for giving useful information. Please help me below.
I have started paying full EMI from Apr 2015 from the date my registration completed and occupied the flat in Sep 2015 but my builder not provided any occupancy/completed certificate till date and still there are some amenities ( play area, gym, parking ) are under construction in my apartment. Can I claim the home interest from Sept 2015 ? Please clarify.
Regards,
Shiva
Dear Shiva,
Ideally you can claim the tax benefits after receiving the Occupancy certificate.
The legal possession of the Flat by the Owner is valid only with the Occupancy Certificate.
Hi,
Thanks for the informative blog.
We took house loan on july 2015 and we are getting possession by jan 2016. Can I claim tax benefit on interest and principle for assessment year 2016-17?
-Sridevi
Dear sridevi,
Yes you can claim but subject to aggregate limits.
Also read : Income from house property & Tax implications.
Sreekanth,
Very informative post. I was looking into a myriad articles, none of them explained the tax implications as good as your blog. Thank you very much for educating us to navigate in the complex Indian taxation.
Regards
Raghav
Dear Raghav..thank you very much, keep visiting 🙂
Hi Sreekanth,
My pre-construction period Home loan interest is about 15Lacs, after possession can I claim 3 Lac (15/5) over and above regular exemption of 2 Lacs on Home loan interest on annual basis.
regards
Hitesh
Dear Hitesh..Is it a self-occupied property or a Let-out one?
Provision related to interest taken on loan for construction,purchase,repairs and renovation of house property
Hi Sreekanth,
I find your article very informative. Thanks for your knowledge sharing. I have one doubt if the person claiming PPI had sold the house within 5 years can he claim 1/5 of PPI next financial year.
Dear Prasad,
Once you sell a property, you are not the owner of that house, so you can not claim tax benefits on that property.However, you can claim tax benefits up to Sale date.
I purchased under construction house in july 2012 with home loan form lic housing finance and got completion certificate on january 2014. I claimed from FY 2013-14 for principle and interest. But I forgot to claim preconstruction interest for financial year 2013-14 and 2014-15. Can I claim it now in 5 equally divided installments from 2015-16 to 2019-2020.Or whether I have to forgo previous 2 installments and claim only remaining 3 from 2015-16 to 202017-18 . please guide.
Dear Nitin..You have to forgo your previous 2 installments and can claim the remaining 3 installments along with regular EMI (subject to aggregate limits).
Who is the competent authority to issue completion certificate
Dear Shweta,
The Completion certificate is issued by the local civic body authority stating the property has been built as per sanctioned plan and is completed.
Who is the authority to issue completion certificate ?
Hi Sreekanth,
could you please let me know if my under constrution time is more than 3 year so i can get tax benefit or not?
Hi Sreekanth,
Its a very helpful article. Thanks for this.
I have couple of questions:
a. I have availed under construction home loan since Jan 2012 and possession has been offered in Aug 2015. Do i qualify in 3 year limit?
b. My Prior period interest outgo until 31-3-2015 is Rs 7.01 lakhs. How much tax deduction can be claimed for this prior period interest in FY 2015-16?
c. I have an interest outgo of Rs 2.33 lakhs for the FY 2015-16. How much of this can be claimed as tax deduction in FY 2015-16?
Thanks for your help.
Regards
Arun
Hi Sreekanth
I have take a home loan starting Jan 2015 and I will get completion certificate in September 2015.
Can I add 1/5 interest component in 2015-16 (this year) assessment?
Can I claim home loan principal amount paid during Jan – Mar 2015 in this years section 80C?
Thanks,
Sachin
Dear Sachin,
No. You can add it in AY 2016-17.
No, you can claim tax benefits on the Principal repayments.
Hi!
Could you help me to let know how much exemption can I avail on my home loan. I had paid interest of around 1.17 lacs in previous year and around 22ooo towards principal payment.
My home loan repayment started in June 2013. the loan taken is for 12 lacs from LICHFL for a tenure of 20 years. The property is self occupied.
Regards
Swati
Dear Swati,
For FY 2014-15, if you have paid Rs 1.17 Lakh as interest amount, you can claim this entire amount as Tax deduction u/s 24.
Also, the principal amount of Rs 22k u/s 80c.
Hi Sreekanth, thank you so much for this very informative article on how to claim tax deduction for pre-construction period. I searched multiple websites for this information and finally reached this blog. You have simplified the process with examples which helped me to understand it without difficulty. Thank you so much!
Dear Reshmi..Very happy to know that you have liked my article. Thank you for your kind words. Keep visiting 🙂
Hi Sreekanth,
Nice article. I have one question though. In the example mentioned above, where the person has paid an interest of Rs 60,000/- in FY 12-13 (pre-construction interest), does that interest need to be declared/mentioned in the tax returns for FY12-13? Simply put, does the pre-construction interest for each year need to be mentioned in the tax returns for each respective year prior to the possession of the property, and if yes, how? Thanks in advance.
Dear Madhur,
Until the construction is completed, one can not claim tax benefits on home loan. So, You can claim the pre-construction period interest only after construction is complete. It can not be declared in IT returns during the pre-construction period.
Date of home loan acquisition – OCT 2013
Date of completion of construction is – March 2015.
can I claim both HRA & home loan Interst (PRI EMI And Full EMI Interst) for FY2014-15 &AY2015-16?
Dear Umesh..Has the house been self-occupied now?
Hello Sreekanth,
Need your advice on the below.
I have been claiming HRA for financial year 2015-2016 till present month. However I have purchased an land of dimension 1000 sq ft with home loan of 35 lakhs from LIC. And my loan repayment started from February, 2015.
Please let me know whether I can declare / claim HRA and also my home loan repayment (Prinicpal under 80C and interest for 2 lakhs) ?
If not can I stop my HRA and claim my home loan repayment.
Dear sarvesh,
Kindly note that tax benefits are available on home loan and not on a loan taken for purchasing land.
Is the construction of your house started/completed?
Hi,
Thanks for your nice article. It will be helpful for me if you could answer my following queries.
1. I am paying the home loan since April 2012, and I got possession in August 2013. So, as per my understanding, for the period April 2012 to March 2013, I can claim the interest portion of home loan in 5 equal installments in next five years. However, I missed to claim this (one installment) in my previously filled return. So, can I claim the next installment in present year’s return?
2. ITR-1 is the correct format for filling such returns, which contains pre-possession period’s interest (as one installment).?
Thanks in advance and expecting your kind cooperation in this regard.
KC
Dear KC,
1 – Yes, you can claim the current year installment along with the tax benefits on regular EMI payments.
2 – kindly go through this article : AY 2015-16 , which ITR form to file?
Dear Sreekanth,
Thanks for your reply.It is indeed really helpful for me.
KC
Hi Sreekanth, Really It was fantastic article with nice examples. One question. Should we fill ITR 4 for claiming PPI?
Mohit
Dear Mohit,
Selection of ITR depends on your income sources. Kindly read my article on : Which ITR form to file?
Very nicely covered. I do not think that the person reading your article need further explanation. Thanks.
Thank you Sir for your kind words 🙂
I was looking for this info for a long time. Thanks for posting Sreekanth. It is really of great help.
Thank you so much dear Sathish 🙂
Hi Sreekanth,
I’ve been following your posts for the past few months and I find your articles very informative and can be understood even by laymen. Thank you and appreciate your work.
Could you also write an article elaborating the tax implications for multiple home loans?
Thanks,
Avinash
Dear Avinash,
Thank you for following my blogs. I will surely consider writing on the suggested topic 🙂