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I've a question about home loan on an under construction property in April`14. The loan disbursed in full and I am paying full EMI. Building is yet to complete.
My question is that whether I'll be able get tax benefits of these pre EMIs (paid before possesion) in 5 consecutive years after possesion or not? I ve heard somehere that if possession doesn't happen in three FYs then total interest component is reduced to 30,000/- only for entire loan tenure.
Pls clarify.Thanks
Ankit
The deduction for repayment of home loan is available only from the year in which possession of the residential house is taken. However if you have already started paying regular EMIs before completion of the property, you cannot claim any deduction for any principal repayment till construction is complete and possession is taken.
Hope above helps with your query!
Just to add above -
Moreover in case you sell such property within five years from the end of the financial year in which construction is completed it has tax implications. All the deductions claimed by you on account of such repayment will be reversed and shall be treated as income of the year in which you sell such property. This deduction is available in respect of residential house property only.