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TAX TREATMENT OF INTEREST DURING CONSTRN ON HOUSING LOAN

vikram (service) (80 Points)

26 May 2010

I UNDERSTAND THAT INTEREST ACCRUED DURING THE CONSTRUCTION PERIOD ON A LOAN TAKEN FOR CONSTRUCTION OF HOUSE CAN BE DEDUCTED IN FIVE INSTALLMENTS STARTING FROM THE YEAR IN WHICH HOUSE IS COMPLETED. LIMIT FOR SUCH AMOUNT IS Rs. 30000/- PER YEAR. HOWEVER IF THE TOTAL INTEREST ACCRUED DURING THE CONSTRUCTION PERIOD IS MORE THAN1,50,000/- CAN THE EXCESS AMOUNT CARRIED FORWARD FURTHER.

VIKRAM

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4 Replies

Shudhanshu Agrawal (Business) (2570 Points)
Replied 26 May 2010

Originally posted by : vikram
	I UNDERSTAND THAT INTEREST ACCRUED DURING THE CONSTRUCTION PERIOD ON A LOAN TAKEN FOR CONSTRUCTION OF HOUSE CAN BE DEDUCTED IN FIVE INSTALLMENTS STARTING FROM THE YEAR IN WHICH HOUSE IS COMPLETED. LIMIT FOR SUCH AMOUNT IS Rs. 30000/- PER YEAR. HOWEVER IF THE TOTAL INTEREST ACCRUED DURING THE CONSTRUCTION PERIOD IS MORE THAN1,50,000/- CAN THE EXCESS AMOUNT CARRIED FORWARD FURTHER. VIKRAM

There is no such limit of Rs. 30,000 p.a. for pre construction period. If amount is more than 30,000 then also full amount will be allowed. Moreover this pre construction period interest will be seprate from the limit of Rs. 1,50,000.

harish sharma (student) (58 Points)
Replied 27 May 2010

section 24 Deductions from income from house property.

Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely:—

(a) a sum equal to thirty per cent of the annual value;

(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:

Provided that in respect of property referred to in sub-section (2) of section 23amount of deduction shall not exceed thirty thousand rupees :

Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed [within three years from the end of the financial year in which capital was borrowed], the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees.

Explanation.—Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years.

here deduction of pre construction period interest is provided by way of explanation which is subject to the main provisions of the section hence deduction of pre construction period interest is subject to the limits of rs 30000/150000 as the case may be.viz genral int + pre const int. can not exceeds 30000/150000.

any excess amount above the limits in absense of specific provisions can not be carry forword for subsequent deduction .

PRATEEK (ACA) (102 Points)
Replied 10 June 2010

IF THE HOUSE PROPERTY WHICH IS CONSTUCTED IS SELF OCCUPIED THEN THE LIMIT IS Rs 30000 per year if the loan is taken for renovation , repair & maintenace etc or if the loan is taken before 1 st of april 1999.

but if the house property is constructed after 1 st of april 1999 the the limit would be of Rs 150000 per year (if the house is self occupied),if the house property is to be let out then there is no limit .

Ms Fonseca (MANAGER) (21 Points)
Replied 21 October 2014

For housing loan taken for under construction property and the possession is given after 3 years , will I get pre construction interest to be set off 1/5th against my income and will I continue to get 2 lac +1/5th for following years?