30 April 2015
Pre-construction interest is a Interest payable on borrowed money prior to acquisition or construction of house property, Aggregated Interest on borrowed capital is also allowable as deduction in five equal annual installments starting from the year in which acquisition or construction is completed as a pre-construction period Interest. Pre-construction Interest deduction is not allowable for renewal, repair or reconstruction of house property.
30 April 2015
Person took home loan on April, 2011 for Rs.15, 00,000 for construction of house property carried Interest @ 10% p.a. , Construction completed on April,2013 and person has paid Rs.3, 00,000 as interest during financial year 2011-2012 and 2012-2013.
Loan taken on April 2011
Construction completed on April 2013
Pre- construction period From April 2011 to April 2013
Pre- construction period interest Rs.3, 00,000
Interest Deduction Rs.50, 000 from financial year 2013-14 (AY 2014-15) onwards in 5 equal Annual installments (3lac/5)
If I taken a Loan of Rs. 15,00,000/- in the f.y. 2011-12 ( out of the Rs. 15,00,000/- I purchase a land for Rs. 7,50,000/- and balance retained for construction ) and construction completed in the f.y. 2013-14 with balance amount , in that case what will be the tax treatment.
Please clarify. ( I think I am missing some point )
In that case , exemption will be allowed only after completion of construction of the house, it will not allowed at the time of land acquiring along with during the period of construction. am I right or wrong.
One more query in this regard , that if interest on home loan prior to acquisition or construction completed has been paid on borrowed capital , in that case it will be allow 1/5 part or condition of exemption satisfied only payable system. ( Interest should be payable only )