Interest paid on house property loan

Tax planning 1186 views 7 replies

Srikanth

Manager - Accounts

74 Points Joined April 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.

Replies (7)

Deepak Tapse

Accounts Manager - Taxation

1771 Points Joined April 2009

You can claim only after get possession of flat.

Manoj BG

Tax Professional and in Service

1795 Points Joined June 2009

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....

Kalpesh Chauhan,

Tax Assistant (Accounting Technician CA

8311 Points Joined April 2008

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....

Somshekar (Rankholder)

158 Points Joined September 2009

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