Interest on housing loan

Hi,

First of all it is to be remembered that u have purchased the house instead of construction therefore pre-construction period interest is not applicable.Next imprtant point is the said house is rennovated.So,the principal amount and interest amt u should claim in the return of income.

You have to show the property in your possession to claim !!

Dear Saravana,

    Pre-Construction period interest is applicable for both constructed houses and aquired houses. Where the property has been acquired with borrowed capital, the interest payable on such capital borrowed for the period prior to the previous year in which the property has been acquired, shall be deducted in 5 equal annual installments. In the given case, house has been acquired in FY 2010. Only minor renovation works such as painting and flooring is pending. At the most, the renovation work can go upto march 2011. Hence, the house will be complete in all respects by march 2011.The interest payable on capital borrowed for the period prior to the 2010, shall be deducted in 5 equal annual installments.  Hence, any interest paid thereafter need not be claimed in installments. Therefore, u can claim the entire interest in the one year itself.

i am fully agreed with CA narayana...............

The interest on housing loan will b claim as pre acquisition interest in the P.Y. in which possession is taken & daduction u/s 80c for principle is alaso taken in that year but not in pre acquisition year...

re-Construction period interest is applicable for both constructed houses and aquired houses. Where the property has been acquired with borrowed capital, the interest payable on such capital borrowed for the period prior to the previous year in which the property has been acquired, shall be deducted in 5 equal annual installments. In the given case, house has been acquired in FY 2010. Only minor renovation works such as painting and flooring is pending. At the most, the renovation work can go upto march 2011. Hence, the house will be complete in all respects by march 2011.The interest payable on capital borrowed for the period prior to the 2010, shall be deducted in 5 equal annual installments.  Hence, any interest paid thereafter need not be claimed in installments. Therefore, u can claim the entire interest in the one year itself.

There is seperate condition for both interest and principal portion.

Principal portion is eligible deduction under sec 80C, but only in the year in which construction is completed and ready to move. Minor touch up work like paint, polish etc. does not matter. In your case it seems that flat is ready to move, so principal portion is eligible as deduction.

Interest portion is allowed to set off as Loss from house property for the self occupied house property, but only to the extent of Rs.1,50,000. Any pre-acquisition interest portion is allowed as deduction from the year of acquisition or construction in 5 equal annual installments, alongwith interest of that year.

agree with Anubhav