Interest deduction for self occupied property

Dear Sir

The benefit on deduction of Interest on Home Loan has been increased to Rs 2,00,000 from Rs 1,50,000 in the case of a Self Occupied House Property. You can claim interest on home loan deduction when –

• You have taken the loan for purchase, construction, repairs or reconstruction of your property
• You own or co-own the property
• You are also a co-borrower for loan for the property
• You can start to claim deductions on interest on home loan beginning the year in which the construction of the property is complete.

Originally posted by : Jay Kumar Ratan
	Dear Sir   The benefit on deduction of Interest on Home Loan has been increased to Rs 2,00,000 from Rs 1,50,000 in the case of a Self Occupied House Property. You can claim interest on home loan deduction when – You have taken the loan for purchase, construction, repairs or reconstruction of your property You own or co-own the property You are also a co-borrower for loan for the property You can start to claim deductions on interest on home loan beginning the year in which the construction of the property is complete.

Agree with jay

Section 24 very specifically states that Tax Deduction for payment of Interest shall not be allowed before the construction is complete. In such cases,

1. If Loan is taken for purpose of Repair/ Renewal/ Reconstruction: No Tax Deduction allowed for Interest paid before Completion

2. If Loan is taken for the purpose of Purchase/ Construction: The Interest that has been paid before the completion of construction should be aggregated and the whole aggregated amount shall be allowed as tax deduction in 5 equal installments for 5 successive Financial Years starting from the year in which the construction has been completed.

3. The pre-construction interest is allowed upto a limit of Rs 2 Lakhs including the current year interest payment on home loan. This can be claimed only after the house is ready and possession is taken over. If the house has been let out, the taxpayer can claim the entire interest component as deduction from the rental income without any restriction.