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Are there any Tax Exemptions if Home is still under construction?

By Unregistered Visitors, Section Ask Questions
Posted on Fri Jan 19, 2007 at 12:51:01 AM EST

Hi,

I had taken a home loan in 2005 for a home which is still under construction. Can there be tax benefits (e.g. Rs 150000 for interest payment and Rs 100000 (max) under sec 80C) ?

Is there any difference in treatment of principal and interest ?

Pls help.

regards,
MK

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Are there any Tax Exemptions if Home is still under construction? | 6 comments (6 topical, 0 hidden)

Here is the Detail (none / 0) (#6)
by maddy on Sun Jan 28, 2007 at 10:18:52 PM EST

Hi there,

I have done lot of research on this here is the detail.

You can not claim Tax Deduction util you take the possesion of your home.
Once you take the possesion you are entitle to avail Interest deduction and principal repayment for the FY in which you got the possesion.
For previous year(s)interest payment you can take in subsequent 5 years (inclusive FY in which possession has been taken)in equal 5 installments but remember if 1/5 portion and your current year interest is greator than 1.5L then your emplyor can not give you more than 1.5L in this case you have separately claim during filing of tax return.
Most Important you have to get the possesion with in three years from the years you borrowed the capital otherwise flat 30000.

please read income tax site...
http://www.taxmann.com/TaxmannDit/DisplayPage/dpage1.aspx?md=2&typ=se&yr=&ch=

Section 24

Interest paid during construction (none / 0) (#2)
by djain128 on Sat Jan 20, 2007 at 08:34:17 AM EST

There is no benefit available for interest paid during construction period if the property is under construction, however, once the house is completed the interest during construction period is allowable in next 5 years in 5 equal installments along with other interest.

The positive actions you take do not stop with you. Many of them go on and on, far beyond you, to people and places you will never know about.

INCOME TAX (none / 0) (#1)
by Unregistered Visitors on Sat Jan 20, 2007 at 05:23:38 AM EST

hi
the benefit under income tax is available only if the construction of the house is complete and possession is taken.the interset payment up to Rs 1.50L is reduced from the income whereas the principal repayment is allowed as deduction under section 80

Back Date (none / 0) (#3)
by Unregistered Visitors on Sat Jan 20, 2007 at 10:12:41 AM EST

I believe that once you have taken possession, you can claim the tax benefits for the period under construction. This can be broken up over a period of 5 years after gettin possession.

I am no expert to say this, but I was told about this 2 yrs back by a tax lawyer and a bank loan officer. Please double check.

[ Parent ]

tax exemption on home loan (none / 0) (#4)
by Pradeep on Tue Jan 23, 2007 at 01:44:48 AM EST

But you cannot avail benefit of Principle amount , which paid during construction period , in later years. You have to avail benefit in the same fy

- Pradeep

[ Parent ]

: Interest Claim for House Under Construction (none / 0) (#5)
by Unregistered Visitors on Sun Jan 28, 2007 at 01:13:03 AM EST

You can claim interest tax exemption till 1.5 lakh, if the house is in possession, or you are sure would be in possession, before the lapse of the current FY.
Then, if the interest for FY 2006-07 does not add up to 1.5 lakh, you can add 20% of the interest paid in each of the previous years to this amount and claim exemption.
But beware, you cannot claim Principal rebate for previous years. Principal rebate under Section 80C (alongwith PPF, ELSS and other savings schemes) can be taken only for current FY, if the house is taken possession of in this FY.
Cheers!
Puneet

[ Parent ]

Are there any Tax Exemptions if Home is still under construction? | 6 comments (6 topical, 0 hidden)

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