Repayment of land loan for construction of house 80cbenefit

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srinivasa reddy banda (Querist)
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07 July 2017 Hello sir i have one doublt regarding income from house property area, where my colleague purchase of plot loan was taken on 23.9.2014 full and final disbursement from bank, thereafter every month EMI is paying of Rs.21938/- for land loan till date separately and subsequently Home loan was taken for construction of house on the same land first disbursement started on 14.10.2015 and and final disbursement was on 21.3.2016 by bank and construction of house also completed on 21.3.2016 , now EMI paying for Home loan is 12081/- and land loan is 21938= total of EMI paying is 34019/-per month now, whether both loans principal repayment can be taken under 80C repayment of house loans and interest paid on both loans can be taken as Under section of 24B while calculation of income from house property which was given to letout(no limt) as a Interest paid on home loan can be claimed as a loss from house property and also sir can we eligible for claim as interest paid for preconstruction period from the purchase of land 23.9.2014 to 31.3.2015,as a total interest paid on land loan for this period was 72050/-, please suggest sir.

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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07 July 2017 You are eligible for both deduction.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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21 July 2025 Great question! Here’s how the Income Tax Act treats loans taken for purchase of land and construction of house, especially regarding deductions under Section 80C and Section 24(b):

1. Principal Repayment under Section 80C
Deduction under 80C is allowed only on repayment of principal for loans taken for purchase, construction, or reconstruction of a residential house property.

Repayment of principal on a loan taken solely for purchase of land is NOT eligible for deduction under Section 80C.

Hence, principal repayment on the land loan alone will NOT qualify for 80C deduction.

Principal repayment on the home construction loan is eligible for deduction under 80C.

2. Interest Payment under Section 24(b)
Interest paid on loan taken for construction or purchase of house property is deductible under Section 24(b).

This includes interest on loan for land purchase only if the loan is for purchase of land together with construction of house, and the loan is taken jointly for land and construction.

If land loan and home construction loan are separate, interest on land loan is generally not allowed as a deduction under Section 24(b).**

However, since your case has two separate loans — one for land purchase and one for house construction, interest paid on the home construction loan is eligible for deduction.

Interest on land loan alone is not eligible for deduction under Section 24(b).

3. Interest on Pre-construction Period
For home construction loan, interest paid during the pre-construction period (i.e., from date of loan disbursement to date of completion of construction) is allowed as deduction in five equal installments starting from the year the construction completes.

The pre-construction interest is only related to the loan taken for construction, not for the land loan.

So, you can claim pre-construction interest paid on the home loan, but not on the land loan.

4. Loss from House Property (Let-out Property)
Interest paid on home loan is allowed as deduction without any limit if the property is let out (rented).

Loss on account of interest can be set off against other income up to Rs 2 lakh per year, and balance can be carried forward.

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