Home loan pre-emi interest deduction while filing itr

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Vaish T (Querist)
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12 July 2017 I took home loan of Rs. 7.5 Lacs in April 2012 for 7 years. I got possession of the property in April 2013.

I foreclosed the Loan in March 2015. Hence I can’t have any home loan interest exemption for FY2016/17 while computing Income Tax this year.
However, my question is related to Pre-EMI interest, which I had paid from April-2012 to March-2013.

I understand, I can avail deduction of pre-construction EMI interest in five equal installments from FY2013-14 to FY2018-19. But since I foreclosed my Home Loan in March 2015, am I still eligible to claim the deduction on Pre-EMI interest while filing Income Tax Return this year? Thank You.

Vaish T

Vaish T (Querist)
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14 July 2017 Any updates on this query? I am waiting for your response, as I need to file ITR asap. Thank you.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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28 July 2024 Yes, you can still claim the deduction for pre-construction interest even if you have foreclosed your home loan. Here's a detailed explanation of how this works:

### Claiming Pre-EMI Interest Deduction:

**1. **Pre-EMI Interest Deduction**:
- **Pre-Construction Interest**: The interest paid during the construction period (pre-EMI) is eligible for deduction under Section 24(b) of the Income Tax Act. This deduction can be claimed in five equal annual installments starting from the year in which the property is acquired or construction is completed.

**2. **Eligibility for Deduction**:
- **Deductible Amount**: As per Section 24(b), you can claim pre-construction interest in five equal installments. The total pre-construction interest paid is divided into five parts and claimed as a deduction each year.
- **Claiming After Foreclosure**: The fact that you foreclosed the loan in March 2015 does not impact your eligibility to claim the pre-EMI interest deduction. The key point is that you must have held the loan and the property must be completed.

**3. **Claiming Pre-EMI Interest**:
- **Filing for FY 2016-17**: Since you got possession of the property in April 2013, you would have already started claiming the pre-EMI interest in your returns from FY 2013-14 onwards. For the fiscal year 2016-17, you should be able to claim the 4th installment of the pre-EMI interest.
- **Foreclosure Impact**: Foreclosure of the loan does not affect the eligibility for claiming pre-EMI interest. The installments for pre-construction interest are based on the time period during which the property is under construction and the loan was active.

**4. **Documentation**:
- Ensure you have the necessary documentation and proofs of the pre-EMI interest paid, such as bank statements and loan statements, to support your claim.

### Example:

- **Loan Taken**: Rs. 7.5 lakhs in April 2012.
- **Pre-EMI Period**: April 2012 to March 2013.
- **Possession Date**: April 2013.
- **Foreclosure**: March 2015.

**Claim Calculation**:

1. **Total Pre-EMI Interest Paid**: Suppose you paid Rs. 1,00,000 as pre-EMI interest.
2. **Claim Deduction**: You can claim Rs. 20,000 (1/5th of Rs. 1,00,000) for FY 2013-14, FY 2014-15, FY 2015-16, and FY 2016-17.

Since the loan was foreclosed in March 2015, the deduction for pre-EMI interest should have been claimed in the relevant financial years up to 2018-19. The foreclosure does not affect the installments of pre-EMI interest that have already been claimed.

### Key Points:

- **Pre-EMI Interest**: Deductible in 5 equal installments starting from the year of possession or completion of construction.
- **Foreclosure**: Does not affect the claim for pre-EMI interest.
- **Documentation**: Maintain all records related to pre-EMI interest paid.

If you have not claimed the pre-EMI interest in previous years, you should ensure you have all necessary documentation and possibly consult a tax professional to amend your returns if needed.

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