Generally, during the construction period one would have to pay ‘pre-EMI’, that is only the interest accrued on the disbursed money. Principal is not repaid during this period.
You can claim home loan benefits u/s 80C & 24(b) only if the following conditions are met:
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You are joint owner of the flat
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You are joint borrower of the loan
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You are paying EMI from your income
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Construction of the flat is COMPLETE
If the construction of the property is not complete by March 31 of the financial year, then no benefit is available for that financial year.
In fact, in such cases, the deduction in respect of principal paid during the years in which the construction is not complete is lost forever since no provision for aggregation of principal exists.
But there is a provision for aggregation of interest paid. The pre-EMI interest is not eligible for deduction u/s 24(b). It becomes eligible for deduction u/s 24(b) from the year of completion of the property and that too in 5 equal installments for 5 subsequent years.
The table below summarizes the tax benefits at the various stages:
| Period |
Deduction for Housing Loan Interest payable |
Deduction for Housing Loan Principal repaid | Remarks |
| Years in which construction is still to be completed |
No deduction is permissible |
No deduction available. Any payment made on this account is lost forever |
Pre-EMI Interest payable to be aggregated to be allowed as deduction in later years. |
| Year in which construction is completed and 4 subsequent years |
Interest payable for that year plus 1/5th of Pre-EMI Interest. Available upto the overall limit of Rs.150,000. |
Available up to the overall limit of Rs. 1,00,000 |
For properties given out on rent there is no upper limit on the deduction under column (2) and is to be claimed as Loss from Housing Income. For self occupied properties the maximum limit is Rs. 1,50,000. |
| From the 5th year after completion of construction |
Interest payable for that year. Available upto the overall limit of Rs.150,000. |
Available up to the overall limit of Rs. 1,00,000 |
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