Interest on home loan- pre possession period

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 December 2015 Dear Experts,
I bought a Flat in FY 2011 , whose possession was given to me in FY 2013.
I take full year interest deduction u/s 24 in FY 2013, 2014. However this year I realized that i forget to take prior period interest as deduction i.e. interest of Fy 2011 & fy 2012 as 20% deduction in next five years.
My question is
1) Can i claim this 20% deduction every year from Fy 2015 to Fy 2019
2) or I can take 60 % deduction in Fy 2015 & balance 20% in next two years

Please help.

Querist : Anonymous

Querist : Anonymous (Querist)

02 January 2016 Waiting for a reply. Please revert experts.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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01 August 2024 For the interest on a home loan incurred during the pre-possession period, you can claim a deduction under Section 24(b) of the Income Tax Act. Here's how you can handle the interest deduction for the pre-possession period and the specifics regarding the claims:

### **Interest on Home Loan - Pre-Possession Period**

1. **Pre-Possession Interest Deduction**:
- Interest on a home loan incurred before the possession of the property is not allowed to be claimed in full in the year of possession. Instead, it needs to be capitalized and claimed in 5 equal annual installments starting from the year of possession.

2. **Deduction Calculation**:
- **Claiming 20% Each Year**: You can claim the pre-possession interest as a deduction in five equal annual installments. If you missed claiming it in the earlier years, you can still claim the remaining portion in subsequent years, provided you haven’t exhausted the five-year limit.

### **Specific Questions:**

1. **Claiming 20% Annually (FY 2015 to FY 2019)**:
- Yes, you can claim the pre-possession interest as a 20% deduction annually from FY 2015 to FY 2019, as per the rules for amortization of interest for the pre-possession period.

2. **60% in FY 2015 and Balance 20% Over Two Years**:
- No, the deduction should be spread equally over five years. You cannot claim 60% in one year and the balance in the remaining years. The deduction should be consistently claimed at 20% per year.

### **Steps to Correct the Claim:**

1. **Revise Returns**:
- If you missed claiming the deduction in the past, you should revise your returns for the relevant financial years to include the deductions. Ensure the claim is divided correctly into 20% per year.

2. **Documentation**:
- Maintain proper documentation for the interest payments and ensure that you include the correct details in the revised returns.

3. **Consult a Tax Professional**:
- It's advisable to consult a tax professional or chartered accountant to assist with revising returns and ensure compliance with the tax laws.

### **Summary:**

- You can claim the pre-possession interest as a deduction in equal installments of 20% each year, starting from the year of possession.
- The total amount must be spread over five years, and the claim cannot be front-loaded or back-loaded.
- Revise your past returns if needed, and maintain all relevant documentation.

If you have any more questions or need further assistance, feel free to ask!

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