Home loan interest vs hra

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Gagan (Querist)

18 January 2017 I have taken a home loan for an under-construction property and currently living in a rented apartment.
Can I claim the interest deduction for the home loan taken and do not claim HRA?
Reason being my interest liability on home loan gives me better tax savings as compared to HRA. So I would like to forego HRA and take benefit on the interest payment on home loan for the property under construction. Please note that the property has been registered in my name but is under construction.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)

18 January 2017 Money may be borrowed prior to the acquisition or construction of the property. In such a case, interest paid/
payable before the final completion of construction or acquisition of the property will be aggregated and allowed for five successive financial years starting with the year in which the acquisition or construction is completed. This deduction is not allowed if the loan is utilized for repairs, renewal or reconstruction. So you can claim interest under Pre Construction for 5 Years from the year of Completion. Till that you can claim HRA benifit.

Kaushik Joshi

Kaushik Joshi (Expert)

18 January 2017 Dear Gagan, section 24(b) prohibits claiming interest on hsg loan deduction till completion of the building. hence the question of claiming interest before completion does not arise.