Under construction House How to Claim Tax Deduction on Home Loan Interest Payments (2)

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Basis of <strong>Tax</strong> <strong>Deduction</strong> Accrual basis Paid basis Quantum of <strong>Tax</strong> <strong>Deduction</strong> allowed Self-Occupied Property: Rs. 2,00,000 Non- Self Occupied Property: No Limit Rs. 1,50,000 Purpose of Loan Purchase/ Repair/ Renewal/ Construction/ Re<strong>construction</strong> of a Residential <strong>House</strong> Property Construction/ Purchase of a new <strong>House</strong> Property Eligibility for claiming <strong>Tax</strong> deduction Purchase/ Construction should be completed within 3 years Nil Restriction on Sale of Property Nil <strong>Tax</strong> <strong>Deduction</strong> claimed would be reversed if Property sold within 5 years Important Points <strong>to</strong> be Considered for Home Loan <strong>Tax</strong> <strong>Deduction</strong>s As per Shew Kissan Bhatter v. CIT (1973) 89 ITR 61(SC), interest paid on the outstanding amount is not tax deductible <strong>Tax</strong> deduction can be availed only if the <strong>construction</strong> of the housing property is completed within 3 years of taking home loan Any commission paid <strong>to</strong>wards arranging a home loan is not eligible for tax deductions Money spent <strong>to</strong>wards registration of the housing property and stamp duty is eligible for tax deductions
In case if the house property is not earning any income <strong>to</strong> the owner and thus the interest of the home loan is a loss, then such loss can be adjusted against income from various other heads within the same financial year In case if the loss incurred cannot be set off against income from other heads of the same financial year, such losses can be carried forward up<strong>to</strong> next 8 years financial years. Only the person who has constructed or acquired the property can enjoy tax benefits. This benefit is allowed <strong>to</strong> its successor of the property. Limit for Home Loan <strong>Tax</strong> Benefits in India The below tax benefits are not for a property but for individual who is owning house In case the property is purchased joint, both the owners can enjoy the benefit however, the limit <strong>to</strong>gether will remain the same The percentage of benefit of tax deduction is usually calculated on the percentage share of ownership/ EMI payment of the loan amount for joint ownership Though you are staying in rented house and applying for HRA deductions, the benefits of tax deductions for house property under <strong>construction</strong> can also be enjoyed by the assesse Quantum of <strong>Deduction</strong> (Rs.) Particulars Self-Occupied Property Non-Self Occupied Property Section 24 2,00,000 No Limit
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Under construction House How to Claim Tax Deduction on Home Loan Interest Payments (2)

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