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Interest paid on house property loan

Srikanth (Manager - Accounts) (74 Points)

24 July 2010

I have booked a flat with a property developer. I have taken house property loan from bankers. I am paying interest now on monthly basis. The construction is yet to be finished and the flat is yet to be handedover to me. Can anybody guide me, how to claim the interest paid for income tax during the preconstruction period.

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7 Replies

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)
Replied 24 July 2010

You can claim only after get possession of flat.

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Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 24 July 2010

U can claim interest accrued during preconstruction interest once construction completes and deduction of such pre construction interest shall be available in 5 equal annual installments starting from the financial year in which construction completed.

e.g. If u'r construction gets completed on may 2010, and interest accrued (whether paid or not) till 31st may 2010 is 1,00,000. Then deduction of Rs.20000 per year would be allowed for 5 years starting from FY 2010-2011 till 2014-2015. This deduction is in addtion to the interest accrued (whether paid or not) after construction over.

Hope this solves u'r query....

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Kalpesh Chauhan, (Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com)) (8310 Points)
Replied 24 July 2010

Originally posted by : Manoj B. Gavali
	U can claim interest accrued during preconstruction interest once construction completes and deduction of such pre construction interest shall be available in 5 equal annual installments starting from the financial year in which construction completed. e.g. If u'r construction gets completed on may 2010, and interest accrued (whether paid or not) till 31st may 2010 is 1,00,000. Then deduction of Rs.20000 per year would be allowed for 5 years starting from FY 2010-2011 till 2014-2015. This deduction is in addtion to the interest accrued (whether paid or not) after construction over. Hope this solves u'r query....

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Somshekar (Rankholder) (-) (158 Points)
Replied 25 July 2010

dear manoj,

pre construction interest is from the date of loan upto immediately preeceding financial year in which house is constructed. ie 31/03/2010 and not 31st may 2010.which is allowed in 5 equal instalment

rest part agreed with you

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