House property under construction – Section 80C benefit
The Indian Income Tax Act stipulates the conditions under which a salaried employee can claim tax rebate on interest payment on housing loan. Section 24 of the Income Tax Act states that no tax benefit is permissible on interest payment during the years in which construction of the house property is still to be completed. Interest paid during the construction period is eligible for deduction in 5 equal installments (across 5 years) from the year construction is completed.
What about tax rebate on account of principal repayment? When the property, for which a loan has been taken, is under construction, can an employee claim tax benefit under Section 80C for principal repayment?
Some payroll managers are of the view that Section 80C doesn’t prohibit tax benefit on account of principal repayment when the property is under construction. After all, there is no explicit reference to completion of construction or taking possession of the property in the text of Section 80C. Hence, is it not fine to claim tax benefit on principal repayment under Section 80C even when the house property is under construction?
Not quite. A close look at Section 80C suggests that tax rebate on principal repayment may not be admissible when the property is under construction.
The relevant clause under Section 80C(2)(xviii) is presented as follows.
(xviii) for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property” (or which would, if it had not been used for the assessee’s own residence, have been chargeable to tax under that head), where such payments are made towards or by way of—
(a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or
(b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or
(c) repayment of the amount borrowed by the assessee from—
(1) the Central Government or any State Government, or
(2) any bank, including a co-operative bank, or
(3) the Life Insurance Corporation, or
(4) the National Housing Bank, or
(5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub-section (1) of section 36, or
(6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or
(7) the assessee’s employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or
(8) the assessee’s employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society; or
(d) stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee,
but shall not include any payment towards or by way of—
(A) the admission fee, cost of share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or
(B) the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out; or
(C) any expenditure in respect of which deduction is allowable under the provisions of section 24;
Clause (xviii) stated above suggests that any payment (including principal repayment of housing loan) for the purpose of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property” can be considered for tax benefit under Section 80C.
In other words, for consideration under Section 80C, the property should be capable of generating income (real or notional) which is chargeable under the head “Income from house property.” Section 22 and 23 of the Income Tax Act present the introduction to income from house property and determination of the annual value of a house property.
When a house property is under construction, there is no likelihood of income, and hence under Section 80C there is no provision for tax rebate on account of principal repayment. Only in the year in which the construction is completed can the principal repayment be considered for tax benefit.
What about stamp duty and registration fee?
The above rule is applicable to not only principal repayment but also stamp duty and registration charges. Such charges cannot be considered for tax benefit under Section 80C as long as the property is under construction.
Please note that stamp duty and registration charges can be considered for Section 80C benefit even in the absence of housing loan as long as the construction/possession of the house property is complete/taken.
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Hi, I have a question. my Mom and me have taken a joint housing Loan. and the Flat is registered in my Mom’s name.
the EMI havent yet started,but we have incurred Registration charges Like stamp duty and Registration Fee. and the construction of the House is completed .
Now can I like to claim the Deduction of stamp duty and Registration fee(even if the Registration is done in my mom’s name) is it possible?
Kindly assist with this query.
Thanks in advance.
If you are not the owner or co-owner of the property you cannot claim any tax benefit.
I purchased flat in month of Jan 14 and Bank also provided all disbursement check to builder but we haven’t got completion certificate then can I get tax benefit user 80C for Stamp Duty and Registration for financial year 13-14
No, you cannot. Until the construction is completed, Section 80C benefit cannot be claimed.
Hi,
Once the completion Certificate is given by the builder, can i claim the Principal Amount Paid during the construction years, in the subsequent 5 years same as in case of interest Amount?
No, only the interest amount can be claimed in the subsequent 5 years.
Hello,
I have booked one home which is under construction …. and possesion is on Mar’16.. where I have started my EMI from which Interest part is less and principal part is higher…
can i claim or avail the benifit of Income tax if I am paying Installment in this year..
please guide me.
thank
Bhargav Bhatt
You can claim tax benefit only after the construction is completed. Hence, you cannot claim any benefit this (2014-15) year.
Hi,
I have taken a home loan to buy a under construction flat. The loan has been sanctioned on 31 Mar 2011. The first installment of loan is disbursed on 10 June 2011. The project is completed in June 2014. Will I be eligible to claim tax rebate of 2 lac on interest paid towards the repayment of home loan from year 2014-2015 onwards.
Thanks
Yes, you can claim the exemption on housing loan interest payment from FY 2014-15.
I m a govt employee and availing a hsg loan 4 construction of my parent’s house which is in the name of my mother only who is also a Co borrower in loan account but Emi is paid by me only as my mother is a house wife and having no income can I avail interest benefit being main borrower of loan account but having no ownership in property,
No, you need to be a co-owner of the property in order to be able to claim the tax benefit. Being a co-borrower alone is not sufficient.
Hi,
I am taken an resale flat on Feb 2014 and i am the second owner.
I paid Stamp Duty and Registration . Can i have tax claim on the stamo duty and registration under 80c
Yes, you can claim exemption under Section 80C.
I purchased a house property and paid its registration fees on March 20th 2014. It was completed in march 14 but the possession and loan formalities were done in April and may.
In which year should i claim the stamp duty u/s 80c?
If the construction was completed in March 2014 and you paid the stamp duty in March 2014, you can claim the 80C benefit (towards payment of stamp duty) in FY 2013-14.
Can i claim the the benefit in year 2014-15, if registery amount paid in march – 2014?
No, the registration amount should have been paid in the year of claiming the tax benefit.
Now that the 80 C has been increased to 1.5 L (ofcource still it has to be passed i guess). i have purchased on resale a flat and this year to i have some 40K pending with 80C. can i make a part repayment to my home loan and show it for 80C ??
Yes, you can.
Hi,
I have taken home loan and my first loan amount was disbursed in Aug 2011. I have not yet given the possession of the house. I have read somewhere that benefit of the interest paid on the loan can only be taken in case possession is given within 3 years from the time loan was disbursed.
Please let me know whether I will be eligible for the benefit under section 24 of IT. Lets assume I will not get possession till Mar 2015.
Thanks,
Kuldeep
For you to be able to claim tax benefit, the acquisition or construction of the house property should be completed within three years from the end of the financial year in which capital was borrowed. If the financial year in which you took the housing loan is 2011-12 and if the acquisition/construction is not completed by March 2015, you stand to lose the tax benefit on housing loan interest.
Hi,
I bought an under construction house in April 2011 and sold off in June 2013 after taking possession in May 2013. I have paid interest during construction. While calculating capital gain on sale of property, can i add this interest to the cost of acquisition.
Please help
The popular view is that interest on housing loan can be considered for deduction (under Section 24) under Income from House Property and cannot be considered for the purpose of capital gains calculation. However, the Income Tax Apellate Tribunal in Chennai (by way of a 2012 judgement) has allowed taxpayers to include interest paid on home loans as acquisition costs while computing capital gains. Please take a look at http://itatonline.org/archives/wp-content/files/Ramabrahmam_interest_house_property_capital_gains.pdf for more information on the case.
I am unable to give a clear-cut answer to your question. Kindly check with a tax lawyer on this.
Hi,
I have booked an under construction flat which is completing by Feb 2015, my EMI will start from Aug 2014, can I get the tax exemption for the interest paid this financial year itself or I need to go for tax exemption from next year after possession. Please suggest.
You can start claim tax benefit from the year in which the construction is completed. If the construction gets completed in Feb 2015, you can start claiming the benefit from FY 2014-15.
Hi,
I have taken a loan for under construction house in September 2013, I have claimed deduction for interest payment for financial year 2013-14 and filled my return, I wanted to know the followings:
– will Income Tax department be able to verify the construction status of my flat
– what will be penalty for the wrong deduction taken for interest component
– can I revise the tax filing and declare the correct return.
please suggest.
“- will Income Tax department be able to verify the construction status of my flat”
Answer: If your case is taken up for scrutiny by the Assessing Officer, the Income Tax Department can demand to see the completion certificate issued by your builder. From the completion certificate, the Department can get to know when the construction was completed.
“- what will be penalty for the wrong deduction taken for interest component”
Answer: The tax benefit on account of housing loan interest will be reversed and the Income Tax Department will raise a demand for the additional tax and the penal interest.
“- can I revise the tax filing and declare the correct return.”
Answer: Yes, you can file a revised return. However, you will have to pay the additional tax and interest.
I have existing home loan of 4 lakhs from SBI and taking benifit for the principal & interset. Now, I have booked another under construction flat and taken home loan of 55 lakhs from SBP in July, 2013.
1. Can I claim the the interest benefit from both the home loans after getting the possession of the new house? Please note that the total annual amount of interest will be more than two lakh (limit for benefit under 24B) for new house alone itself.
2. Will closing the old home loan help incase only one house is allowed for interest benefit? Need clarity.
3. Claiming of interest in next 5 years (20 % each year) after possession will be above the 2 lakh limit for that year or its’ inclusive?
For example:
If I’m paying Rs. 50,000/- EMI per month. The total annual amount paid will be 6 lakhs. Of this around 4 lakh will be interest component for one year. In 3 years amount will be 12 lakh. 20% of this will be 2.4 lakh.
So afer possession, can I claim total interest benefit as 4.4 lakh in that FY ( 2 lakh for that FY and 2.4 lakh from past when house was under construction)?
Please guide.
Regards-Kuldeep
1. Can I claim the the interest benefit from both the home loans after getting the possession of the new house? Please note that the total annual amount of interest will be more than two lakh (limit for benefit under 24B) for new house alone itself.
Ans: Yes, you can. It is clear from your question that you have 2 house properties. When you have more than property, you can declare only one as self-occupied. The other property or properties should be declared as either let-out or deemed to be let-out (even if you have kept it locked). Hence, only the interest from the first property is subject to the Rs 2 lakh limit. You can claim the entire interest amount as exemption for the second (let-out) property. Of course, you will also have to declare the annual rental value for the let-out property.
Let me know if this sounds confusing. Unfortunately, the law is a bit complex here. Simplification will require a longer answer on the nuts and bolts of Section 24.
2. Will closing the old home loan help incase only one house is allowed for interest benefit? Need clarity.
You don’t have to close the old loan since declaring more than one property is permitted.
3. Claiming of interest in next 5 years (20 % each year) after possession will be above the 2 lakh limit for that year or its’ inclusive?
If it is a self-occupied property, the pre-possession interest should be included in the RS 2 lakh limit.
Hi..
I had become a member in my office’s house building society and had been allotted a flat there. The Society is still under construction and the payment is being made in installments as the construction is being done. I have taken a Housing Loan for this purpose and have started its repayment. The flat is still under construction.
Am I eligible for 80-C deduction???
Please advice.
Regards
Padam
You claim 80C benefit only after the property’s construction is complete.
Hi,
i purchased under construction flat on Aug-2014 and paying my home loan from Oct – 2014.
Builder informed me that Possession is from Dec -2014.
what are all the benefits i can get for this financial Year 2014-2015?
from Jan-2015 only i will be paying my full home loan EMI.
Can i avail Stamp Duty charges? Principle under 80c? and interest paid?
If you receive possession of the property in FY 2014-15, you can avail 80C and Section 24 (interest) benefits in 2014-15.
Stamp duty and Registration charges 80c tax benefit: I purchased new property in Dec. 2014. Paying stamp duty & registration in Jan. 2015. Posession in March 2015.
Here, builder is asking for the whole amount and from his bank account (online) he will pay stamp duty and registration. In that case, as a buyer, will I be gaining tax benefit under 80C for Stamp duty and Registration charges?
Yes, you can. But please ensure that you possess the proof of payment for stamp duty and registration. Also, please see if you can receive a receipt (from the builder) which indicates that the sum of money has been received from you for the purpose of stamp duty and registration fee payment.
sir,
i am taking loan of Rs. 30 lacs through public sector bank for construction of house on the land which is in my wife’s name. i am the first applicant and my wife is the co-applicant for the loan. The EMIs will be paid by me only since she is a housewife. Can I claim tax exemption on the loan?
Sir, your early reply is highly solicited and enable me to take decision since my loan is in final stages of approval.
yours truly
S. Ani
If you are not the owner or co-owner of the house property, you cannot claim tax benefit from the housing loan. The fact that you are a loan applicant is not adequate for claiming tax benefit.
sir
in continuance to my last query, if i take a power of attorney from my wife, will it enable me to avail tax exemptions on housing loan.
further, in present situation, is there any other way to get housing loan tax exemptions?
regards
S. Ani
According to the Income Tax Department, “persons who purchase properties on the basis of Power of Attorney and under long term leases (12 months & more) are also deemed to be owners.” This means that deemed owners can claim housing loan interest deduction. However, please consult a tax lawyer to check if the power of attorney you wish to take from your wife will make you a deemed owner as per Section 27 of the Income Tax Act.
thanks
regards
Hi Gautham,
I also have similar case, so creating draft of General POA and take signature of my wife and mine along with witnesses and notarised it, that will suffice the need of taking tax benefit under dimmed ownership.
After that should i take benefit as below.
80C = 1,50,000
24B = 2,50,000 and
80EE = 50000 (I purchased and loan sanction in FY’16-17 – property value < 50 L)
Can you share some draft of POA ? which help us.
Kindly check with a legal expert for the format.
But I could available tax benefit using Power of Attorney ? correct ?
As long you comply with the Section 27 of the Income Tax Act, which talks about ownership of the house property.
i am planning to buy resale flat. will i get all tax benefit as we get new flat after possession.
thanks
regards
amit
Yes, you can claim tax benefits after possession.
We booked a vacant plot on my name and my wife’s name (50:5o share)during the year 2009 for which we received SBI home loan of Rs 12,00,000.00 on 8.10.2009. We applied for a plan permit and got the approval on 26.12.2011. We started our house construction in the same plot and in the mid of construction, we applied for a home loan for Rs 20,00,000.00.The first installment of home loan of Rs 15,00,000.00 was issued on 10.08.2013 and final installment of loan was issued during the month of April, 2014. The house construction was completed on 3.8.2014. We remitted the following details of Interest to SBI.
A) For a loan of Rs 12,00,000.00 (Date of Issue: 8.10.2009)
i) Pre-construction period interest
8.10.2009 to 31.3.2010 = Rs 45032
01.04.2010 to 31.3.2011 = Rs 91157
01.04.2011 to 31.3.2012 = Rs 90475
01.04.2013 to 31.3.2014 = Rs 96164
———–
Total Amt of Interest = Rs 4,08,732
———–
ii) Post construction period interest
Projected interest (01.4.2014 to 31.3.2015) = Rs 89,734
B) For a loan of Rs 20,00,000.00 (Date of Issue: 10.8.2013)
i) Pre-construction period interest:
(10.8.2013 to 31.3.2014) = Rs 1,10,564.00
ii) Post construction period interest
Projected interest (01.4.2014 to 31.3.2015) =Rs 1,94,900.00
Since the house was not completed within three years from the date of issue of first loan( i.e. 8.10.2009), I am told that
(i) I will be eligible for Rs 30,000.00 only instead of Rs ((50%*4,08,732)/5) +(50%*89,734.00) on the Rs 12,00,000 loan and
(ii) the pre-construction and post -construction interest on the second loan of Rs 20,00,000.00(issued on 10.8.2013) for a value of Rs ((50%*1,10,564)/5) +(50%*1,94,900.00) loan can be fully claimed.
Our house is self occupied. Under such scenario,
Our Queries are:
1) What exemption can we claim individually and under which all section {Sec 80 / Sec 24} and what amount?
2) As the final disbursement of loan falls during the month of April 2014,Is there a rule that construction MUST be competed in THREE Years, to claim full tax benefits from the date of first installment of loan? i.e (8.10.2009)
3) In order to avail full tax exemption of Rs 2,00,000.00, whether the constructed house is to be self occupied or to be let out.?
3) The construction is started after the first loan and the second home loan is also availed, how the completion date of construction is calculated? i.e from the date of first loan or from the date of 2nd loan?
Kindly advice.
1) What exemption can we claim individually and under which all section {Sec 80 / Sec 24} and what amount?
Ans: The tax benefit can be claimed by each co-owner in proportion to his or her share in the housing loan EMI.
2) As the final disbursement of loan falls during the month of April 2014,Is there a rule that construction MUST be competed in THREE Years, to claim full tax benefits from the date of first installment of loan? i.e (8.10.2009)
Ans: The Rs 150,000 benefit is available only if the construction is completed within three years from the end of the financial year in which capital was borrowed. For the loan taken on 08.10.2009, the maximum benefit which is available on interest payment is Rs 30,000.
3) In order to avail full tax exemption of Rs 2,00,000.00, whether the constructed house is to be self occupied or to be let out.?
Ans: The limit of Rs 2 lakh is applicable only for self occupied property. For a let-out property, there is no limit on the tax benefit.
3) The construction is started after the first loan and the second home loan is also availed, how the completion date of construction is calculated? i.e from the date of first loan or from the date of 2nd loan?
Ans: The completion date is irrespective of the first or the second loan dates. For each loan, the tax benefit should be calculated as per the applicable rules. Please note that if after construction, you are repaying both loans — one with Rs 30,000 benefit and the other with Rs 150,000 benefit — in the same year, the law seems to be silent on which limit should be considered. You could seek advice from a tax lawyer to decide on which loan should be considered for the benefit of tax benefit calculation.
KINDLY THAT THE DATE OF COMPLETION OF HOUSE IS 8TH MARCH,2014. SORRY FOR THE WRONG ENTRY AS 3.8.2014
I have purchased a flat from a builder (under construction) for which i paid full amount as advance by taking a loan from a bank where my EMI from day 1 (FY 2012-13) contains Principle and Interest portion.
Since 80C does not permits claiming interest till possession of the flat which will be in Dec’15. Can i get a claim of Principle amount which i am paying where i know that the interest can be claimed in equated 5 portions once the possession is recieved.
Further what if i sell this flat before the possession. Than how will i claim the rebate of Income Tax for the previous period. (Both Prin and Int)
Please guide.
1. Even to claim benefit under Section 80C (principal repayment), you need to have taken possession of the property.
2. If you sell the house property before possession, you stand to lose the tax benefit on both principal repayment and interest payment.
in case advance is taken in installments; which will be the date of advance.
in case advance is taken in installments; which will be the date of advance for the purpose of section 24- Interest on housing loan deduction
The law doesn’t seem to refer to the date of advance in explicit terms when a loan is disbursed across installments. We could consider the date of last installment as the date of disbursement.
Sir,
I got into agreement on purchase of New Flat ( Under-construction) in 2010 and took a housing loan in 2011 from a National Bank. The construction is assumed to be completed by March 2016. Whether i will be able to claim Tax benefit on Principal and interest part or not at that time.
Prior to possession/completion of the property, you will not be able to claim any tax benefit on principal repayment, registration expenses, or stamp duty. The benefit on principal repaid, registration expenses, or stamp duty during the construction period cannot be claimed later. The tax benefit is available only on the interest component paid during construction period and the same can be claimed across 5 years subsequent to construction completion.
I took the loan on October 2011 and construction completed on August 2014, Regristration also completed.EMI also started from the Nov 2011.
Principal repayment:
so far i paided 80K towards the principal.How much i will be eligible for the tax deduction under 80C ( wheather 80K or 16K (80/5) ) ?
I spend around Rs 1.7Lac on registration & stamp duty.
How much i will be eligible for the tax deduction under 80C ( wheather 1.7Lac or 34K (1.7lac/5) ) ?
Please guide.
Thanks
Principal repayment and Registration/Stamp duty:
Prior to possession/completion of the property, you will not be able to claim any tax benefit on principal repayment, registration expenses, or stamp duty. The benefit on principal repaid, registration expenses, or stamp duty during the construction period cannot be claimed later. The tax benefit is available only on the interest component (paid during construction period) and the same can be claimed across 5 years subsequent to construction completion.
Hi Gautam,
Thanks for the reply.
But the construction of my flat is completed and also registered on the August14.
Please let me know, may i eligible for the tax deduction on the principal payment,registration cost and Stamp duty. If yes, please let me know…is it 100% or 100/5=20% of the amount.
Thanks in Advance
The divided by 5 rule does not apply for principal repayment. Any principal repayment or stamp duty payment made during the construction period will not give you any tax benefit (even after construction gets completed).
If the construction gets completed in Aug 14, you can claim tax benefit on principal repayment/stamp duty paid only in FY 2014-15. Any principal repayment/stamp duty paid in the earlier years will not give you any tax benefit.
I booked a new flat under construction and registration done by15//05/2014 and mortgage deed by12/8/14.Building handed over to me after construction on feb 2015.sir i claim for registration and stamp duty under 80c in 2014-2015 assessment year
Yes, you can claim tax benefit under Section 80C in the financial year 2014-15.
Hi,
I have booked an under-construction property which is supposed to be delivered (possession) by Mar-2016. As I read through the above thread, it’s mentioned that no principal and interest deduction can be done in income tax before the construction of property is completed. I have few questions:
a) What does “construction of property is completed” means?
– Builder has given the possession and sale deed has been completed through registration of property
– Occupational certificate has been received by the property and registration has been done
– construction of the building has been completed but not handed over to the the buyer
b) If the builder will be handing over the property in Mar’15 through sales deed and registration of property, can we declare it to our employer for the tax deduction purposes on April’14?
a) Construction completion means the house property is ready for self-occupation or letting out. The buyer should have taken possession of the property. For the purpose of income tax deductions, a completion certificate from the builder shall serve as documentary proof.
b) If the construction of the house of property is completed by Mar 15, you can declare it to your employer for 2014-15.
Hello,
I have booked an underconstruction flat in Jan’12, completion of which will be n Mar’15. I have opted for a home-loan with pre-emi interest to be paid. My pre-emi has started from Oct’12 along with the first disbursement, as the emi interest is charged basis the amount disburesed to the developer as demanded.
There has been no deduction against principal, until actual loan EMI starts, which is post possession.
My question is that once I get possession in Mar’15, in what sequence can I claim the interest paid during construction. In above e.g will I be able to claim interest paid from Oct’12 to Mar’13 or Oct’12 to Sep’13, when I ask for tax exempetion to my employer for 2014-15, as we would be eligible to claim exemption on interest paid during under construction, but spread across 5years?
Also, will I be able to claim the interest paid during under construction and the current interest (i.e. post possession) combined total to the extent of only 2 lac per year?
Would it be ideal (post possession) to pay off some part of home loan and keep only enough loan outstanding, the interest for which combined with interest paid during under-construction would not exceed to more than 2 lac as per current exempted limit????
My question is that once I get possession in Mar’15, in what sequence can I claim the interest paid during construction. In above e.g will I be able to claim interest paid from Oct’12 to Mar’13 or Oct’12 to Sep’13, when I ask for tax exempetion to my employer for 2014-15, as we would be eligible to claim exemption on interest paid during under construction, but spread across 5years?
Ans: The total interest amount paid during the construction period should be summed up and divided by 5. The divided by 5 amount shall be the per-year amount to be claimed across 5 years.
Also, will I be able to claim the interest paid during under construction and the current interest (i.e. post possession) combined total to the extent of only 2 lac per year?
Ans: Yes, the combined interest amount cannot exceed Rs. 2 lakh per year.
Would it be ideal (post possession) to pay off some part of home loan and keep only enough loan outstanding, the interest for which combined with interest paid during under-construction would not exceed to more than 2 lac as per current exempted limit????
Ans: Not sure what your question here is.
I want to buy an under-construction property (first house) and want to let out after possession. I understand that if the property is leased out, there is no restriction on the interest amount claimed for tax benefit under section 24.
My questions are
1. In above situation (after possession), will I be able to claim (post possession interest + 1/5 of the interest paid during construction) fully? (means beyond Rs. 2 lakhs limit).
2. If I take a construction-linked home loan with pre-emi facility, then what is the date for consideration of commencement of home loan (i.e. first disbursement or when full emi starts). I am asking this question because the completion date of the property is more than three years from the first disbursement of the loan.
Thanking you in advance.
1. In above situation (after possession), will I be able to claim (post possession interest + 1/5 of the interest paid during construction) fully? (means beyond Rs. 2 lakhs limit).
Ans: Yes.
2. If I take a construction-linked home loan with pre-emi facility, then what is the date for consideration of commencement of home loan (i.e. first disbursement or when full emi starts). I am asking this question because the completion date of the property is more than three years from the first disbursement of the loan.
Ans: If the construction is not completed within three years from the end of the financial year in which capital was borrowed, you will be eligible to claim only Rs 30,000 and not Rs 150,000 as benefit. The law seems to be silent on how to determine the date of loan disbursement when the loan is disbursed across installments. I presume we can consider the date of last disbursement as the loan disbursement date.
Hi,
I bought an under-construction property from a builder in June-2012 and I have taken my first installment from Bank in Aug-2012.
The apartment will get ready only by May 2015 which means the construction is not going to be within the three year limit. As I read above in your previous replies, the tax benefits can be only 30,000 as opposed to 2,00,000.
What is the alternate that I can do to get the tax benefit of 2,00,000 on interest component? If I transfer the loan to another bank, will that be considered as a new loan and hence 2,00,000 benefit?
Thanks
Karthi
The law allows tax benefit when you transfer the housing loan from one financial institution to another. However, there is nothing in the law which allows you to consider the new loan date while applying the 3-year rule construction completion rule. Hence, we are unable to saying anything with certainty. However, the Income Tax Department could well disallow this since it may contend that the transfer of loan to the new bank has been carried out with the sole objective of circumventing the law.
I booked one flat in oct-2010 with loan of 22 lac and i started EMI(not PRE-EMI) but till date house is not completed. in between i book second flat and get possession in may 2014. Now i am paying EMI for both the house. My question is that can i get tax(interest)benefit for-flat which is not constructed(booked in 2010)
No, you cannot. The construction should be completed for you to get the tax benefit on the first property.
I m a saleried and availing a hsg loan 4 construction of my parent’s house which is in the name of my mother only who is also a Co borrower in loan account but Emi is paid by me only as my mother is a house wife and having no income can I avail interest benefit being main borrower of loan account but having no ownership in property,& how can get income tax benefit to me .
Please give me soln for tax benifit.
You cannot claim tax benefit if the property is not in your name. You should at least be a co-owner to claim tax benefit.
Can i get tax benifit for home loan which property is my Mother’s name .
No, you cannot. However, the law does recognize deemed ownership in this regard. Under certain circumstances, a person can be considered to be the owner (for the purpose of housing loan deduction calculation) even if he is not the owner as per the property document. During the normal course of events, however, you cannot claim tax benefit if the property is not in your name.
Hi,
I am going to purchase a flat in Nov,2014 and will get my registration done in Nov,2014. I am co-owner of this flat with my mother and also co-borrower of the loan with my mother but total EMIs will be paid by me only. I will be paying my EMIs from Dec,2014 and I will get my possession in March,2015. I have following questions:
1. Can I claim Registry and stamp duty amount in section 80C in this fiscal year as I will get possession in March,2015 while I have paid this amount in Nov,2014?
2. Can I claim total principle amount paid towards repayment of loan from Dec,2014 to March,2015 in section 80C? or I can claim principle amount paid only for March,2014 as I will get possession in this month only?
3. Can I claim total interest paid towards repayment of loan from Dec,2014 to March,2015 in this fiscal year? or I can claim interest amount paid only for March,2014 as I will get possession in this month only?
4. Since I am the only one who will be paying total EMIs(not my mother), Can I claim 100% of total amount paid towards stamp duty, principle and interest keeping the cap of each section?
Thanks.
1. Can I claim Registry and stamp duty amount in section 80C in this fiscal year as I will get possession in March,2015 while I have paid this amount in Nov,2014?
Yes, you can – as long you get possession before 31-Mar-2015.
2. Can I claim total principle amount paid towards repayment of loan from Dec,2014 to March,2015 in section 80C? or I can claim principle amount paid only for March,2014 as I will get possession in this month only?
You can claim the total principal amount paid from Dec 14 to Mar 15.
3. Can I claim total interest paid towards repayment of loan from Dec,2014 to March,2015 in this fiscal year? or I can claim interest amount paid only for March,2014 as I will get possession in this month only?
You can claim the total interest amount paid from Dec 14 to Mar 15.
4. Since I am the only one who will be paying total EMIs(not my mother), Can I claim 100% of total amount paid towards stamp duty, principle and interest keeping the cap of each section?
Yes, you can claim 100%.
Now a days, bank provides loan for Registration and Stamp Duty as well. You can check on LICHFL website, they provide loan of 80% of the total cost of house including Registration and Stamp Duty. In this case, Can we avail tax benefit in section 80C by showing amount paid in Registration and Stamp Duty?
In my case, total loan approved to me has three component: Home Loan(based on house cost shown in registry), Registry & Stamp duty Reimbursement and renovation Loan. Out of 3 component, In which component/components I can avail tax benefit(Principle + Interest)?
You can avail tax benefit on loan principal and interest pertaining to all the 3 components.
Due to EPF and principle amount paid towards loan, I am not able to get full benefit of amount paid towards Registry & stamp duty as upper limit of 80C is 1.5L. Can I get benefit of residue amount left in next fiscal year after taking benefit of partial amount of Registry & stamp duty in this fiscal year?
Thanks
No, you cannot utilize the unutilized benefit next year. The benefit on account of the residual amount in the previous year will be lost.
Hi,
I have booked property in current financial year 2014-15. Registration is done and home loan procedure is in progress. Possession is in October 2015.
Can I opt for 80c exception in this financial year against registration, stamp duty and booking amount paid.
Also till the possession I am staying of rent, will i be applicable for exception in HRA also
Thanks a lot
If you are likely to take possession in Oct 2015, you cannot claim any exemption in FY 2014-15. Any expense incurred (in FY 2014-15) towards registration and stamp duty will not give you any tax benefit.
As long as you stay in a rented house, you can claim HRA exemption.
Thanks Gautam for your reply.
Some more things to ask.
Can I opt exemption in next financial year, I got to know that It will be divided into 5 and added into next 5 financial year under 80c. How will it work?
Yes, you can claim exemption in the next financial year.
Interest payments made prior to completion of the house property should be summed up and divided by 5. The resulting amount shall be claimed as exemption over a period of 5 years. For example, if you paid Rs 1 lakh towards interest prior to completion, you can claim Rs 20,000 per year as the annual exemption amount for 5 years.
Please note that the total benefit on account interest payment including both the divided by 5 amount and the current year interest payment cannot exceed the overall limit (Rs 2 lakh per annum for FY 2014-15) specified by the tax rules.
I have booke a underconstruction house from builder by taking loan and 1st installament was disburesed in Apr 2009. The sanctioned loan was Rs. 10 lac and about 8 lac was paid till mar 13 as on demand basis by Builder. Due to hike in prices another Rs 10 lac loan was taken and the full and final payment was made in Dec 2013 to the builder. The house was offered for Possesion by the builder in July 2013 means construction was completed before the same. the builder has registered the house on my name in May 2014 due to non availabity of dates by state revenue official as they have told me.
1. please let me know what will be my effective date of Loan for the purpose of Section 24 First disbursement of loan i.e Apr 2009 or the Dec 2013 which is the last date of disburtion of loan.
2. whether i will be able to get the Maximum Tax Benifit of Rs. 2lac or only of rs 30000/- only
1. The law does not refer to the date of disbursement in explicit terms when a loan is disbursed across installments. We could consider the date of last installment as the date of disbursement.
2. Yes, you can claim the maximum tax benefit.
Hi,
I have purchased a flat in May, 2014.
I have received Possession Letter from Builder but did not receive Completion Certificate from him though construction was complete in AY 2014-15 itself.
Can I claim tax benefit for Stamp Duty and Registration Fees?
Yes, you can claim tax benefit. However, please ensure that you obtain the completion certificate at the earliest. The tax department, if it decides to scrutinize your case, may disallow the benefit if you are unable to produce the completion certificate.
The Bulider says that to obtain a Completion Certificate, he needs to pay up 3 Lacs to the local corporation and hence unwilling to do so. Is it mandatory for him to provide the Completion Certificate? Can I consult and take help of a Lawyer and force him to provide it?
You can check with a lawyer in this regard. As long as the Income Tax Department does not seek the Completion Certificate, you will have no issue. In case the Department demands the proof for construction completion, you will need to produce the document.
Dear Sir ,
I will get the possession of my under construction property in January 2015.
The First Loan Instalment was disbursed in Oct 2010. Due to various kinds of delays the possession did not happen within 3 years so as I understand I can get only 30K as Income Tax benefits on Interest paid from financial year 2015-16.
1) Can I claim the interest paid during the last 4 years when the house was under construction ?
2) For how many years Can I claim the 30K benefit starting next financial year
Regards
Alok Pathak
“1) Can I claim the interest paid during the last 4 years when the house was under construction ?”
Ans: Yes, you can.
“2) For how many years Can I claim the 30K benefit starting next financial year”
Ans: Until you wish to use the loan interest for obtaining tax benefit.
My House construction is finished but I havnt received possesion letter since Builder didnt received Completion Letter. I am getting Electricity bill. Can this be taken as proof to claim the stamp duty, registration charge and Principal repayment. Also I have done the stamp duty, registration charge payment in 2013-2014 fiscal year. can i claim in 2014-2015 year
“I am getting Electricity bill. Can this be taken as proof to claim the stamp duty, registration charge and Principal repayment.”
Ans: No. You will need a completion certificate in case the Income Tax Department seeks proof of completion.
“Also I have done the stamp duty, registration charge payment in 2013-2014 fiscal year. can i claim in 2014-2015 year”
Ans: You cannot.
Sir,
My first home loan is over in Mar 2014. now, I have taken second home loan and paying around 3L as interest and 1L as pricipal amount. This is let out property for which i got possesion in Nov 2013.
I want to know if I can claim 1L principal amount under 80C deduction for financial year 2014-15?
You can claim 80C benefit (subject to the 80C limit) in 2014-15 to the extent of the principal amount you repay in FY 2014-15.
i have availed loan from employees co op society for home constuction , can i claim interest paid for income tax rebate ?
Yes, you can.
Hi Gautham,
I have gone through forum before putting up this querry. This forum is really helpful and cleared almost all doubts.
Query: I have booked a flat which is under construction. My EMI would be (3.6 lacs yearly. After completion of house, I am planning to let out. The interest component (interest paid during construction/5 + EMI after possession) will be roughly 4 lacs (2.5 lacs +1.5 lacs).
Shall I get tax benefit for 4 lacs.
If it is a self-occupied property, the total interest, comprising the divided by 5 number (pertaining to the construction period) and the interest for the particular year (EMI minus principal), cannot exceed Rs 2 lakh (as per the budget for FY 2014-15) per year.
Hi,
I’m constructing a home in my native.
For this home loan has been taken on 22-Feb-2014.
The Loan re payment has started on Aug 14.
Still the Construction is going on. Can I get any tax benefits on the Principal/ Interest Paid towards this account on 2014-15 FY.
You can avail the tax benefit only after the construction is completed. In other words, for FY 2014-15 the construction should be completed before the end of the year for you to avail the benefit.
Hi,
I have a question. I have moved into one flat since september .But the registration deed is not done still. Can the tax rebate on interest and principal be availed in this FY?
Thanks
If you are unable to establish the ownership of the flat, you cannot claim tax benefit pertaining to the housing loan.
i’ve taken a home loan last year (FY 2013-14) and started paying EMI from day 1.
the possession will be given somewhere in oct,2015.
during this FY 2014-15 i’ve paid around 85K as principal and 1.25 Lakhs as interest.
Am i eligible for tax rebate and how much tax exemption will i get under such conditions?
If you take possession of the house property in Oct 15, you can claim tax benefit only from 2015-16 onwards.
Hi,
I purchased a flat (under construction as on 12th jan 2015.) I got the home loan in July 2014 and have start paying EMI’s. the Expected date of the Possession was October 2014, however the construction is still not completed. My builder has assured me the possession by First week of March 2014.
As I an engineer, I have already declared the interest loan in company’s IT computation and now I am suppose to do the real declaration.
Question:
1. I am aware that i can claim Interest component of the housing loan under section 24. However please let me know, do i need to have the possession of the flat in order to claim it?
2. if I give my company a tentative date (like march 15 2015) and avail the benefit and my builder fails to give me possession (+letter) in march 2015. Will I have to pay the income tax (and charged interest!!) while filing returns (form 16)??
Will it be the same case for SD and Reg as well?
Please help.
1. I am aware that i can claim Interest component of the housing loan under section 24. However please let me know, do i need to have the possession of the flat in order to claim it?
Ans: Yes, you have to take possession of the flat in order to claim the tax benefit.
2. if I give my company a tentative date (like march 15 2015) and avail the benefit and my builder fails to give me possession (+letter) in march 2015. Will I have to pay the income tax (and charged interest!!) while filing returns (form 16)??
Ans: Yes, you have to. In fact, your company itself may reverse the tax benefit and charge tax in your March 2015 salary.
Will it be the same case for SD and Reg as well?
Ans: yes, it will be.
Before writing I have gone through the forum, it is very much helpful. I have some questions. I have booked an under construction flat on Jan’11, and taken loan from my employer on March’12 and also EMI started then. On Feb’14 I have registered the flat in my name on giving assurance by the builder that the possession will be given withing March’14. But they have given possession (physical) on September’14 onwards without completion certificate. After lots of follow up they only provide POSSESSION LETTER on Jan’15 and completion certificate is still not available. Now the questions are-
1. Can I claim home loan interest benefit u/s 24 i.e. current year accrued interest(Rs. 16600) + 1/5th of previous years interest(Rs. 59000)?
2. Can I legally occupy the flat with the Possession Letter and Sale Deed? What are the legal problem I may face?
3. There are almost 70 flats, about 12 persons have taken possession like me and already residing there?
Please guide me for what to do?
1. Can I claim home loan interest benefit u/s 24 i.e. current year accrued interest(Rs. 16600) + 1/5th of previous years interest(Rs. 59000)?
Ans: The Income Tax Department expects you to possess the completion certificate in order to claim the tax benefit. In case you do not have the completion certificate and start claiming the tax benefit, the tax department may require you to establish that the property has indeed been completed and you have started occupying it.
2. Can I legally occupy the flat with the Possession Letter and Sale Deed? What are the legal problem I may face?
Ans: We try to answer questions related to income tax and payroll here. Since your question falls outside of our purview, kindly check with a legal expert who specializes in housing transactions.
3. There are almost 70 flats, about 12 persons have taken possession like me and already residing there?
Please guide me for what to do?
Ans: Please see my answer to your previous question.
Hi,
I Just want to ask if i am already having a vacant land in my name and i am constructing a house by taking home loan for construction only and not of land. Can i get tax benefits right from the beginning itself?
Your early response will be appreciated.
Your can claim benefits on the housing loan once the construction is completed and you take possession of the property.
i have availed loan from aided school Teachers co op society for home reinnovation , can i claim interest and principal paid for income tax deduction ? if so plz attach the rule
Hi,
I have booked an under construction flat in my name. The possession will be given within March 2015. They will provide POSSESSION LETTER and NOC. The registration and stamp duty will be paid after March’15.
Now the questions are-
1. Can I claim home loan interest benefit u/s 24 i.e. current year accrued interest+ 1/5th of previous years interest for 2014-2015?
2. Can I claim exemption on home loan principal amount u/s 80c for 2014-15 ?
2. Can I legally occupy the flat with the Possession Letter and NOC? What are the legal problem I may face?
Please guide me for what to do?
1. Can I claim home loan interest benefit u/s 24 i.e. current year accrued interest+ 1/5th of previous years interest for 2014-2015?
Ans: Yes, you can.
2. Can I claim exemption on home loan principal amount u/s 80c for 2014-15 ?
Ans: Yes, you can.
2. Can I legally occupy the flat with the Possession Letter and NOC? What are the legal problem I may face?
Please guide me for what to do?
Ans: Kindly check with a real estate lawyer in this regard.
Dear Sir,
Kindly clarify whether I can claim the Stamp Duty & Registration Charges that was incurred by me on the ‘Settlement Deed’ in Sept 2014 (My father transferred the ownership of a piece of land to me – not having any house in it).
Best Regards,
Gopesh
I presume you are asking if you can claim tax benefit under Section 80C. No, you cannot in this case of land without house property. Only stamp duty and registration charges related to house property are allowable.
Hi Gautham,
First of all, thanks a ton for taking out time and answering each and every query, people are putting out. I’m putting out my specific query as below with a scenario, please help me to understand the tax implications on it.
Property: Under-Construction.
Date Loan taken: May’ 2013
Targeted Completion with Possession: Aug 2015
Loan Tenure: 10 Years
Assumptions: No Principal Amount and Interest on housing loan permitted on Under-Construction house.
Queries:
1) Will the total interest paid from May’ 2013 till March’ 2015 divided by 5, will be allowed for deductions over and above 2 Lakh exemption under section 24(b) ?
2) From point#1 above, or it will be from May’ 2013 till Aug’ 2015 divided by 5, will be allowed for deductions over and above 2 Lakh exemption under section 24(b) ?
3) What if house is not self-occupied but rented out from Sept’ 2015, but I myself staying in a Rented house, I understand I can claim HRA plus tax exemption on Housing Interest. Will I be able to claim entire interest on housing loan without 2 lkh limit plus 1/5th of the previous interest ?
3(a) Or Say for example, for the period April 2016 to March 2017, total Interest on housing loan comes to 3 lkh. In the same period house is also rented out, plus 1/5 of previous years also eligible. In this scenario, what all benefits I’m eligible ?
Thanks,
Shyju
1) Will the total interest paid from May’ 2013 till March’ 2015 divided by 5, will be allowed for deductions over and above 2 Lakh exemption under section 24(b) ?
Ans: The total limit including the Pre-EMI interest cannot exceed Rs 2 lakh per annum
2) From point#1 above, or it will be from May’ 2013 till Aug’ 2015 divided by 5, will be allowed for deductions over and above 2 Lakh exemption under section 24(b) ?
Ans: The question looks the same as the previous question. Pls correct me if my understanding wrong.
3) What if house is not self-occupied but rented out from Sept’ 2015, but I myself staying in a Rented house, I understand I can claim HRA plus tax exemption on Housing Interest. Will I be able to claim entire interest on housing loan without 2 lkh limit plus 1/5th of the previous interest ?
Ans: Yes, you can claim both. If the house is let out, the RS 2 lakh limit does not apply.
3(a) Or Say for example, for the period April 2016 to March 2017, total Interest on housing loan comes to 3 lkh. In the same period house is also rented out, plus 1/5 of previous years also eligible. In this scenario, what all benefits I’m eligible ?
Ans: If the house is let out, the Rs 2 lakh limit does not apply.
Thanks a ton Gautham for taking out time and clarifying my queries.
Hi Gautham,
Few more queries 🙂
1) If the under construction house is neither self-occupied nor rented out and is just lying vacant but loan is still in force (since I’m staying in other place in a rented accommodation because of professional job), will I still be able to claim 2 Lkh every year ?
2) In worst case scenario, if an under-construction is not completed within 3 years, I understand, I cannot claim 2 Lkh but limited to 30 K. Does that mean, till the time loan is in force, 30K every year can be claimed under sec 24 or is it that I cannot claim any benefit of Interest paid because of the delay ?
Thanks in advance,
Shyju
1) If the under construction house is neither self-occupied nor rented out and is just lying vacant but loan is still in force (since I’m staying in other place in a rented accommodation because of professional job), will I still be able to claim 2 Lkh every year ?
Ans: No, as long as the house property is under construction, no tax benefit is available. Once the construction is completed, you can claim tax benefit by specifying the house as a self-occupied property even if you stay in a rented house elsewhere on account of your job.
2) In worst case scenario, if an under-construction is not completed within 3 years, I understand, I cannot claim 2 Lkh but limited to 30 K. Does that mean, till the time loan is in force, 30K every year can be claimed under sec 24 or is it that I cannot claim any benefit of Interest paid because of the delay ?
Ans: Yes, you are correct. Only 30k is available.
Thanks Gautham once again for the clarification.
Regards,
Shyju
Hi,
I had a taxation related question.
We have an under construction house which was taken in 2012 Dec . The builder ( Employer) had a scheme wherein post paying for the upfront downpayment , for the first 2 years, the employer ( Builder in this case) , would pay the pre emi amount .. After the first 2 years , we have the option of selling it back to the builder or continue paying the EMI going forward if we want to retain the apartment.
Essentially , the loan ( 40 lakhs) would be taken by the employee and he would have to pay the pre emi amount for the first 2 years but this would get reimbursed back by the employer ( Builder) so net net there is no outflow for the employee .
Couple of questions :
1) Is the amount that the employer reimbursing month on month to be shown as Other income as part of tax filings and do we need to pay tax?
2) Does it make more sense to dispose this off to the builder now and pay short term capital gain or pay the EMI for the next 9 months and then dispose it off paying Long term gains post indexation .
Rgds,
Manoj
1) Is the amount that the employer reimbursing month on month to be shown as Other income as part of tax filings and do we need to pay tax?
Ans: If the employer is reimbursing the pre EMI amount each month and if this amount need not be repaid to the employer, this amount shall be deemed to be salary as per the Income Tax Act and shall be taxable.
2) Does it make more sense to dispose this off to the builder now and pay short term capital gain or pay the EMI for the next 9 months and then dispose it off paying Long term gains post indexation .
Ans: From the point of view of taxation, it would make sense to look at the tax outflow in Rupee terms under each scenario and then make a conclusion.
I had purchased a resale flat (which was registered in July 2012. The payment cycle was such that the final payment was made only in March 2013. The agreement carries a clause that title transfer will happen only on realization of cheques. I now intend to sell the flat and register the new agreement by end of July 2015. Will this deal fall under the preview of short term capital gain. Technically speaking I will be completing 3 years from the date of original agreeement. Solicit your response.
Since it is a property the construction of which has been completed, the date of acquisition shall be the date of registration. Hence the 3 year period should be calculated from July 2012, the date of flat registration.
Thanks for your response. Greatly appreciated. One last linked question to the above one. I have a buyer who is interested to purchase the flat and is also willing to wait until July 2015 to register the flat. My question is am I allowed to collect money as advance and keep certain portion of money say 20-25% as final payment to me made in end july 2015 or is it necessary that any deal should be done only after completion of 3 years to avoid short term capital gain. Thanking you in anticipation of a final advise.
Hello sir,
I have bought a flat in noida in june 2011 which was under construction,
At present stage noida authority is not issuing completion certificate/occupancy certifiacte to any builders in noida since last one year due to NGT(noida bird santuary) issue. so registration of flats are stopped.
now builder has issued the provisional possession letter for fit out in march 2015.
here costruction completed within three years
then can i take rebate on home loan premium repayment & interest paid under section 80c & 24 for FY 2014-2015.
thanks
shravan singh
One can go by the possession letter and state that the tax benefits are available under both Section 80C and 24 for FY 2014-15.
Hi,
I want to know followings:
1. Can a plot loan which is older than 3 year (purchased in Aug 2011) be clubbed with construction loan to make a composite home loan. construction is expected to be completed in Feb 2016. Whether i can take tax benefit on the plot loan after merger.
2. If i take loan for construction in April, 2015 and the same construction is completed in Feb 2016. what will be the pre-construction period for which i can take income tax benefit on Pre-EMI interest.
Thanks.
1. Can a plot loan which is older than 3 year (purchased in Aug 2011) be clubbed with construction loan to make a composite home loan. construction is expected to be completed in Feb 2016. Whether i can take tax benefit on the plot loan after merger.
Ans: Not, it cannot be clubbed. The construction loan alone qualifies for tax benefit.
2. If i take loan for construction in April, 2015 and the same construction is completed in Feb 2016. what will be the pre-construction period for which i can take income tax benefit on Pre-EMI interest.
Ans: Since the construction is completed within the same year (of taking the loan), there is no pre-construction period. The entire interest amount paid in 2015-16 including that paid prior to Feb 16 can be considered for tax benefit in 2015-16.
Dear Shri Gautham Ji,
After your reply i visited my Bank and told them all the facts put by you. They told that the bank has introduced new loan product wherein only after 3 years plot loan can be merged with construction amount and the new loan will be treated as “Home Loan”. Please advice whether such a loan is approved for income tax rebate. If not why bank has introduced such a loan product.
Thanks.
As long you can establish that the loan is for the house property and not just for the plot, you can claim tax benefit.
Hi Gautam,
First of all, let me appreciate the fact that you are doing an incredible public service here, that too FOC. Great & keep it up.
My questions are also similar to some of above querry, i would make it very short & to the point.
1. I have got OC ( occupancy certificate) in April 15 from CIDCO for one building in Navi Mumabi in which one flat is mine. I have been paying EMI since april 2012. My question: Can i claim the Tax Deduction now in this FY upto 2 Lac for Interest component including the Interest part – Pre Construction period.
2. Currently i am in Rented flat & might continue to live in rental for this FY 2015-16. I am already claiming HRA from my Employer. Question is : Can i claim both HRA and Interest part as in point 1. If yes , then how is the treatment / process to be done while filing IT return.
Looking forward to hear from you.
Thanks & Regards
Mayank Singh
1. I have got OC ( occupancy certificate) in April 15 from CIDCO for one building in Navi Mumabi in which one flat is mine. I have been paying EMI since april 2012. My question: Can i claim the Tax Deduction now in this FY upto 2 Lac for Interest component including the Interest part – Pre Construction period.
Ans: Yes, you can.
2. Currently i am in Rented flat & might continue to live in rental for this FY 2015-16. I am already claiming HRA from my Employer. Question is : Can i claim both HRA and Interest part as in point 1. If yes , then how is the treatment / process to be done while filing IT return.
Ans: Yes, you can claim both. The details salary after the benefit from HRA exemption will be presented by your employer in the Form 16 they issue. You can present the details of the income from house property and the interest on housing loan in the Income from House Property section of your income tax return.
Hi i have a joint loan for construction and we have occupied the house where my mother is primary borrower and i along with my father and wife are secondary borrower the emi is getting debited from my account. The property is the name of my mother. So can i claim income tax exemption under 80C since my mother is not claiming any.
Pls reply soon.
If you are not the owner or co-owner of the house property, you cannot claim tax benefit from the housing loan. The fact that you are a loan applicant is not adequate for claiming tax benefit.
Hi Gautham,
I have a query regarding the tax rebate on the interest paid towards home loan repayment. It has been mentioned at many places that this tax rebate can be claimed only if the pessession of the flat is obtained within 3 FYs from the FY in which home loan was taken. However in case of construction linked payment for an under construction flat, from when would these 3 FYs be calculated? From the time when the first loan installment was taken or from the time when the last loan installment was taken?
The law doesn’t seem to refer to the date of loan disbursement in explicit terms when a loan is disbursed across installments. We could consider the date of last installment as the date of disbursement.
Please note that if the acquisition or construction is not completed within three years from the end of the financial year in which the capital was borrowed, the maximum deduction shall be restricted to Rs 30,000.
Thanks a lot for the quick response! Any references or links that I can refer to.
Not sure what you want the reference for. If you are referring to the loan disbursement date, my logic is as follows.
When a loan is disbursed across installments, the date of last disbursement can be considered as the loan date for the following reason.
Until a loan is completely disbursed, it is unlikely that the assessee will be able take possession or complete the construction of the property. It further follows that until possession is taken or the construction is completed, the housing loan will not qualify for tax benefit.
Hi,
I’ve taken home loan in Feb 2015 for constructing own house for which pre EMI was paid for 2 months and the EMI started from April 2015. Ths house will be completed in May/June 2015. How do I get a completion certificate because I’m the one constructing the house and there is no builder involved ? Also, how to claim the pre-EMI as well as EMI starting from Feb and April respectively? Any inputs would be helpful. Thanks a lot for the informative blog.
1. If you are building the house yourself, you can provide a declaration that the construction of the house property has been completed, to your employer.
2. The total Pre-EMI amount (paid in Feb 15 and Mar 15) should be divided by 5 and claimed across 5 years. For FY 2015-16, there will be 2 interest components with regard to income tax calculation.
a. Interest paid in 2015-16 (for the EMI starting April 2015).
b. Pre-EMI divided by 5.
Add a. and b. from above and claim the total interest. Please note that the total interest deduction cannot exceed the annual limit specified by the Income Tax Department.
Hi Gautham,
Thanks for replying. That clarifies lot of things.
Hi Gautham,
First what a useful thread God bless you for answering everyone’s queries 🙂
I have taken a loan of under construction of flat Started paying pre emi from jan 15 and completion is May 16 and prob registration is March 16 in bangalore
1. I understand if possession is March 16 I can claim the tax benefit of entire pre emi interest component for year 2015 – 2016 ?
2. But if I transfer the sale at the time of registration to new buyer and possession certificate is given but prob to the new buyer of the flat, will I still be able to get tax benefit on interest I paid during pre emi?
3. If no and then I register the flat on my name and then sell it , can I use the interest on pre emi towards covering my short term capital gains in bangalore?
In general what is good practice as above for tax and non tax purposes. The main thing is how to be tax complaint and how to benefit the corpouse interest I will end up paying during pre emi as my intention is mostly sell around the time of registration.
1. I understand if possession is March 16 I can claim the tax benefit of entire pre emi interest component for year 2015 – 2016 ?
Ans: Yes, you can.
2. But if I transfer the sale at the time of registration to new buyer and possession certificate is given but prob to the new buyer of the flat, will I still be able to get tax benefit on interest I paid during pre emi?
Ans: No, you cannot. You should be the owner of the property in order to claim the tax benefit.
3. If no and then I register the flat on my name and then sell it , can I use the interest on pre emi towards covering my short term capital gains in bangalore?
Ans: The Income Tax Act does not explicitly state whether interest on housing loan can be considered as cost of acquisition for the purpose of calculating capital gains when a house property is sold. However, there are court judgements which state that interest can be considered as cost of acquisition in case of property acquisition. Please take a look at the below post.
http://www.hinote.in/capital-gains-housing-loan-interest-cost-acquisition
I had booked a flat in 2013 which is still under construction .I had taken homeloan of Rs 20 lac on it. I have sell the flat in February 2015 in under construction stage . What benefit in income tax can I avail for paying of interest of Homeloan in Assesment Year 2015-2016 ?
You cannot claim any tax benefit as long as the house property is under construction.
Why interest paid for under construction property is not eligible for tax exemptions especially for cases where property possession will not happen within same year?
..After all its the same hard earned money for which we have already paid income tax and we have paid interest on housing loan too doesn’t matter we get possession or not
According to the Income Tax law, you need to pay tax on your income from house property (rental income), if you have one. As a tax benefit, you can reduce from the income from house property the interest payment on housing loan since the interest cost is incurred for the purpose of the creation of the house property. Now if the house property is self-occupied, you will have zero income from house property and after deduction of the interest payment, you will have a negative income from house property. This negative income from house property can be used to reduce the taxable salary income.
As long as the the property is under construction you cannot have an income from house property (whether self-occupied or let-out) since the property is not available for use. Since there can be no income from house property, the law does not allow tax benefit on account of interest payment. Only when the property construction is completed or possession taken can we deem that income from house property is possible.
The interest payment on housing loan should be seen in the context of income from house property, and hence the condition that the property construction should be completed.
Hi Gautham,
Please help.
I booked a flat in April 2012 and registration was done in June 2012. My flat is part of Phase 1 of a special township upto Phase 5. Phase 1 possession was promised in Dec 2013 but still it is going on. Our agreement listed a long list of amenities and also a clause that it will be completed within 3 yrs.
As of now, builder has started asking people to take possession by paying last disbursement and maintenance fund. And he is providing NOC letter in return. Few people have paid the full amount and occupied their flat.
Now coming to my case, I have taken LIC loan for which first disbursement was done in July 2012 with a fixed interest of 10.7% for 3 yrs. Now since its over 3 yrs, my loan should now be in floating interest period and hence interest rate should be lowered to below 10% (as per my understanding)
(a) But when I enquired with LIC, they stated that floating interest rate is also 10.7% (although currently they are offering loan to new customers at fixed rate of 9.9% for 3 yrs).
As a result, I am planning to transfer my loan to SBI as they’re offering me 9.7% but they can takeover loan ONLY if last disbursement is done and possession is taken over.
1) I understand ideally builder should also provide possession letter along with NOC. This possession letter is provided by builder in case of Big projects independent of any authority. What is the actual procedure? Any relevant detail will greatly help.
2) Because of above criteria (point (a)), I am confused if I should get the possession by paying last disbursement via LIC and also maintenance fund by myself and obtain NOC letter or not. What do you suggest?
3) Is it a good idea to take possession if builder is only providing NOC and NOT the possession letter?
4) SBI manager also told me that I will be eligible for tax exemption on interest and principal repayment. Can we get tax exemption on the basis of NOC letter?
5) My understanding is we can get tax exemption only if we obtain Occupancy certificate or completion certificate which I believe is provided by Municipal Authorities. But SBI manager contradicted saying since it is a township project, it takes long time for the project to complete and hence tax exemption can be taken on the basis of NOC letter & possession letter provided by builder. Can you please clarify?
If you can provide details to above points or direct me where I can find relevant information, that will help me & other blog readers a lot, as this is a situation which most buyers face sooner or later.
Thank you in advance.
We are not experts in the area of real estate and given that local practices differ from state to state, we request you to consult with a real estate expert familiar with laws pertaining to the state in which your flat is located.
4) SBI manager also told me that I will be eligible for tax exemption on interest and principal repayment. Can we get tax exemption on the basis of NOC letter?
Once the flat possession is taken, you can claim tax exemption on principal repayment and interest payment. According to the Income Tax Department, a completion certificate from the builder or a self-declaration (that the possession has been taken) by the assessee is enough in this regard.
5) My understanding is we can get tax exemption only if we obtain Occupancy certificate or completion certificate which I believe is provided by Municipal Authorities. But SBI manager contradicted saying since it is a township project, it takes long time for the project to complete and hence tax exemption can be taken on the basis of NOC letter & possession letter provided by builder. Can you please clarify?
Please take a look at my answer to the previous question.
sir i paid stamp registrion in dec 2014.
i got possession certificate on 31st july 2015.
now i am filing income tax return.
can i claim refund via in 80 c. while filing income tax return in july 2015.(assesment year 15-16)
pls reply
thanks
No, you cannot. This is because the house property possession did not happen in AY 2015-16.
sir
property possession happened in assessment year 2015-16
If the possession happened in AY 2015-16, you can claim the benefit in AY 2015-16.
respected sir
i bought new property 15 november 2014 (registration date).
i got possession certificate 28 july 2015.
can i claim stamp registration in 80c , while filing e return.
If you took possession of the property in July 2015, you cannot claim 80C benefit for FY 2014-15.
I have purchased a flat in Feb. 2012 under construction and construction will be completed in December, 2015 and taking loan from PNB in May, 2013. I am paying now only interest amount to the PNB. Now in this year December 2015 or January, 2016 I will get possession of this flat. Whether I will claim Interest on PNB Loan of full year for the financial year 2014-15 of Rs. 2 Lakhs or only after possession of flat only. i.e. interest from Dec. to March,. 2015 (Four Months) only. Please reply.
Punjabi.
You can take benefit for the total interest paid in the year. Some people are under the mistaken impression that only the interest for the months falling after the possession of the house property can be considered. This is incorrect. In your case, if you take possession in Dec 2015, you can consider the interest paid for the entire year (FY 2015-16) for tax benefit.
I took a home loan.
Is it a must to register the house before starting the EMI payments..?.
Is it so .. that the disbursement can be done only before registration..?
Please check with the bank/institution from which you have taken the home loan.
Hello,
Thanks for detailed info.
I have two houses (one self-occupied and one rented). For self-occupied house, I have no housing loan pending. Even for rented one, it is there for another 5 years only.
Now, I bought a flat in 2011. It is still under construction. I have taken loan for this third property. I registered the property in Mar 2015. Yet to get possession of the property as the work is still going on. I am paying interest from Jan 2014.
Please suggest tax implications for third house?
Thanks
Raghavendra.
What will be the tax implications for me for this third property
With regard to the third property, you can get tax benefit on account of the loan only after the construction is completed.
Hi,
I bought a flat in Pune in 2007 and got that registered in the same year. I got the possession in 2011 but since the registry was done I claimed the income tax benefits even before I got the possession.
Now got a notice from IT department for claiming the benefits before possession.
Did I do any wrong?
How to handle the notice please.
No tax benefit can be claimed prior to completion/possession of the house property. I am not sure what the notice you have received contains. You may have to recompute your tax liability without taking into account the tax benefit due to the housing loan and pay the additional tax along with interest to the department.
Dear Gautham Sir
I booked a house property and the loan was sanctioned on 29/12/2011. Meanwhile due to CNT and other reason construction was stopped and resumed after near about 5 months latter. The final disbursement was made by the bank on Dec 2014 and also by then the registration etc was complete including inspection and mortgage by the Bank.
Afterwards the builder issued me a letter during Jan/Feb 2015 where it was indicated that I can do necessary painting, do the interiors and and also can stay. They also handed over the key to us. But since fire clearance was not given by the Govt, the possession certificate held up and only they gave it in July 15. My question is that based on the last disbursement on Dec 2014 can I claim three years period and avail deduction of Rs 2 lacs. Secondly whether the word ‘possession’ compulsorily needs to be written in the certificate. Can I use the earlier letter and claim deduction?
Regards
Indrajit
My question is that based on the last disbursement on Dec 2014 can I claim three years period and avail deduction of Rs 2 lacs.
Ans: Yes, you can.
Secondly whether the word ‘possession’ compulsorily needs to be written in the certificate. Can I use the earlier letter and claim deduction?
Ans: Once the house property possession is taken, you can claim tax exemption on principal repayment and interest payment. According to the Income Tax Department, a completion certificate from the builder or a self-declaration (that the possession has been taken) by the assessee is enough in this regard.
Thanks a lot, Gautham. Thanks for helping me.
Dear sir, I am purchase a flat in noida by buider, I want to know about service tax (3.5%) of amount given by bank check to builder.
May I also give service tax on loan amount of bank check?
OR we are found service tax (3.5%) benefit on loan amount?
Please ask me for better guideline.
I am not clear about your question. The tax benefit is available on the interest paid and principal repaid, subject to the limits imposed by Section 24 and Section 80C of the Income Tax Act.
Hello,
I have taken 28 lakh home loan for 24 years on 9.9% plus Icici Lombard Insurance, the registry done in the month of 27 Aug 2015 and there is approx. Rs 8500/- deducted as EMI in the month of September 2015 and in October there is EMI for 25500+ 1300 ( insurance) and by November end we will shift to our New House, Kindly suggest can how to show it my IT deceleration for above in 24 or 80 C and what documents need to submit at time of IT deceleration document submission.
After you take possession of the house, you can claim benefits under both Section 80C (principal repayment, stamp duty, etc.) and Section 24 (interest payment). If you are a salaried person, you can submit the principal and interest details to your employer for TDS calculation.
Your employer may ask you to submit the housing loan certificate as proof.
I started constructing a building on the land which I own. Now I have spent around 3 Lakhs on KUDA permission. Can I submit these bills for tax benefit ? Also, I am planning to take loan, construction goes 9 more months, If I start EMI from first month itself, Can I showcase for 80 C ?
“Now I have spent around 3 Lakhs on KUDA permission. Can I submit these bills for tax benefit ?”
Ans: As per Section 80C, expenses incurred towards stamp duty, registration fee and other expenses for the purpose of transfer of house property can be considered for the purpose of calculating tax exemption. Expenses of any other nature cannot be considered.
Also, I am planning to take loan, construction goes 9 more months, If I start EMI from first month itself, Can I showcase for 80 C ?
Ans: Principal repayment and interest expenses can be considered for tax benefit only after the building construction is completed.
Hi,
I have recently bought a flat(under construction property – possession is in July 2016).
I have made the initial payment of mandatory 20% of the consideration amount (Rs. 16 Lakhs) before applying for the Home Loan.
I have also self funded the Stamp Duty and registration charges ( Approx Rs. 5 Lakhs).
The Loan EMI starts from Dec 15 ( Rs 50,000 per month: Rs. 44000 Interest and Rs. 6000 Principle)
What all components can I cover for availing Tax Benefits under section 80C ?
Your guidance would be of great help. Thanks in advance.
—
Nitin
If the possession happens in July 2016, you can claim tax benefit only from the financial year 2016-17.
Tax benefit, within the overall limit of Section 80C, includes principal repayment and stamp duty registration charges.
i have bought property which is under construction i have paid registration charges on 28 Mar 15 which year should i consider this charges
If the construction completion/possession does not happen before 31-Mar-2015, you cannot get any tax benefit (in that year or later) from the registration charges.
Sir,
I have made agreement of under construction flat in 2013 by taking loan. I may get possession only in 2016. I am planning to sell my 10 year old house. Can I claim LTCG if I repay the loan of new flat from sale proceedings of old flat?
No, you cannot claim any reduction in LTCG since you will only be repaying a loan of an asset you have already acquired.
Thanks for all the valuable info on this website. I have a question. Your help is needed.
I have to submit my Proof of investment (POI) in the first week of January, 2016.
Earlier, I had declared the following (based on which tax was deducted from salary.)
flat – date of possession : as august 2015.
interest amount ~ 2,00,000
principal amount ~ 50,000
Note:
1) I am currently staying in a rented house. (as the new apt – has no lift operational yet. it will happen by Jan end).
2) I will be moving to my new apt on 1st february, 2016.
3) house is already registered in my name.
Can I claim both HRA and tax benefit?
or HRA till august (as i had declared earlier) – and from august till march 2016 – the interest & principal
I am confused. Please suggest a solution.
Regards,
Sumedha
Since your date of possession is Aug 2015, you can claim housing loan benefit in the current year (FY 20-15-16).
If you stay in a rented house until Jan 2016, you can claim HRA exemption until Jan 2016. In other words, you can claim both HRA exemption and housing loan benefit.
Hi,
I have purchased an apartment and the possession will be in March 2016. Builder is saying that he will get the completion letter by municipal corporation by June 16 and you can occupy the flat by march 16. He will give occupancy letter by march 16. Can I claim the 1/5th interest for this year to get the tax benefits by self acknowledgment as per IT circular no 8/2012, dated 5th October 2012?
Yes, you can.
Hi,
If I sell my under construction house before it is ready for possession (still in the construction stage), will I be eligible for claiming tax benefits on the EMIs that I have paid?
Darsh
No, tax benefit on housing loan is available only after the construction is completed.
Hi Gautam,
I stumbled upon this page last night and felt very good on the how you have been helping people by answering their queries so well in time and quickly.
My queries:
1. I would be travelling outside India for an year or so in January, 2016. Would I be eligible to pay tax in India for FY 2016-2017, if I end up staying there will April 2017?
2. I bought a under construction home in March, 2011 for which Loan got approved in April, 2011. Due to NGT issue, I got provisional possession from the builder in July’ 2015. I cannot taken registry of this flat since issue is not resolved yet.
Queries:
a. Am I eligible to take tax benefit this year on interest component paid since April, 2011 to till date?
b. This flat is in Noida and I currently live in Gurgaon as my office is in Gurgaon. I have rented this flat now. This would be counted as Self-occupide or Let out?
Thanks
Antariksh
1. I would be travelling outside India for an year or so in January, 2016. Would I be eligible to pay tax in India for FY 2016-2017, if I end up staying there will April 2017?
Ans: Your residential status in FY 2016-17 will determine your tax liability. If you happen to be a resident Indian, your income (both Indian and foreign income) will be taxable in India. If you happen to be a Non Resident Indian (NRI), only your Indian income will be taxable in India.
An NRI is one who:
a. Resides outside India for a period of 182 days or more during the relevant previous year or;
b. Is not present in India for 60 days or more during the previous year and again for a combined total of 365 days or more during the previous 4 years prior to the previous year.
2. I bought a under construction home in March, 2011 for which Loan got approved in April, 2011. Due to NGT issue, I got provisional possession from the builder in July’ 2015. I cannot taken registry of this flat since issue is not resolved yet.
Queries:
a. Am I eligible to take tax benefit this year on interest component paid since April, 2011 to till date?
Ans: Yes, you can take tax benefit for the interest component paid since April 2011 after the possession is taken.
b. This flat is in Noida and I currently live in Gurgaon as my office is in Gurgaon. I have rented this flat now. This would be counted as Self-occupide or Let out?
Ans: Since you have rented the flat, it will be counted as a let out property and the rent earned shall be the income from house property.
Hi Gautam,
I have one question that,
I purchased a plot by taking composite home loan(plot+construction),here the condition i was said from bank was with in 3 years should start the construction of house.
Agreeing to this,Initially taken 15L as part of composite loan to buy plot and informed bank guys need additional 25L during construction?
For land registration I paid the stamp duty and registration amount and paying EMI for 15L, so after taking construction loan my loan amount will become 40L .
Could you please explain how can I claim tax benefits on this composite loan?
You can claim benefit under both Section 80C (principal repayment, stamp duty, and registration charges) and Section 24 (interest payment) as soon as the construction is complete.
Hi Sir,
I have taken possession of a flat on feb 2015. whether 80c is applicable for the FY 2014-2015. If yes, what is the amount I can claim for 80c and tax benefit for interest;Since I have started doing my repayment my loan from May 2014 onwards.
Total Amnt paid towards principal from May 2014- Mar 2015 : 55,000
Total Amt paid towards interest from May 2014 – Mar 2015 : 1,50,000
Regards
Shama
Yes, 80C benefit is available for fy 2014-15 since you have taken possession in Feb 2015. You can claim benefit of Rs 55,000 under Section 80C (principal repayment) and Rs 1,50,000 under Section 24 (Deduction on income from house property).
Hi Gautham,
I’ve 2 queries:
1. I’ve just completed construction an independent house (where my parents would live) at my native and I will get completion certificate from a registered architect (who drew the plan of house) this month, January(not from any local civic body). Can I use this as possession certificate to claim tax benefit on interest/principal for the financial year ending March’16?
2. My home loan was sanctioned on August ’15 and I started paying EMI from the same month. I’ve a bank statement showing principal and interest components that will be paid till March’16 issued from bank. As I mentioned, I’ll get completion certificate from the architect on Jan’16. Getting occupancy certificate from the Panchayat (if they have such a document) might take another 1 month or so. Now, I understand that I can claim the full interest paid from August till March ’16 under Section 24 this year (Correct??). But from when can I claim the principal :
(a) Only from Jan’16, as Aug’15 to Jan’16 might be considered as construction period and principal amount cannot be claimed then.
(b) From August’15, as construction got completed in same financial year?
Thanks in Advance!!
1. You can use the possession certificate issued by the builder or issue a self-declaration that the construction is complete.
2. You can claim tax benefit for both interest paid and principal repaid during the period Aug 15 to Mar 16.
We (Me and My mother) have taken home loan of 38,40,000 at 9.5% for 25 Yrs resulting in EMI of 33550. Flat is under construction and possession is expected by Nov’16. Out of this, builder is currently asking for 28,40,000 and we have processed the same. This amount will be released in Feb’16. My mother is first applicant and I am co- applicant. Currently, I have submitted ECS from my salary account for EMI deductions, but for tax benefits it can be done in parts from my mother’s account also, as she is also tax payer.
1. How much EMI we are supposed to pay as it part disbursement and since when? What is Pre-EMI and Full EMI?
2. Once I get possession of house, should we show it as self-occupied or rented as there are few tax benefits of rented house?
3. How about stamp-duty and registration cost will be handled which will be around 3,00,000?
1. How much EMI we are supposed to pay as it part disbursement and since when? What is Pre-EMI and Full EMI?
Kindly check with your bank/housing loan institution for information on the timing of EMI payments.
2. Once I get possession of house, should we show it as self-occupied or rented as there are few tax benefits of rented house?
You should show it as self-occupied or rented on the basis of whether it is actually self-occupied or rented. Just for the sake of tax benefits one cannot show a rented property as self-occupied or vice versa.
3. How about stamp-duty and registration cost will be handled which will be around 3,00,000?
If the possession happens in Nov 2016, you can claim all tax benefits related to housing loan only from financial year 2016-17. There will be no tax benefit on stamp duty and registration charges incurred prior to financial year 2016-17.
I have allotted a flat from greater Noida Authority under finance scheme on March 2014 under buildup housing scheme but Flat not yet completed and expected possession date is Jan 2017. My question is
Whether I have claimed the interest benefit under section 24B for the interest amount paid to Greater Noida Authorities
You can claim tax benefit only after you get possession of the flat. Only interest on housing loan can be considered for income tax benefit.
Can we claim deduction of interest paid on housing loan even if principal amount of loan has been not paid during the year
Yes, as long as the construction is complete and you have taken possession of the house property.
Hi.. I have a query and will be grateful if you could please guide me.
I have booked a under construction flat expected to be completed by March 2020.. I have signed the agreement for sale, paid the stamp duty , registration fees and the agreement is registered. The occupancy certificate will be given by 10th march 2020. I have applied for a home loan and is expected to make the final payment by April 30, 2020.. So i will be able to move by May 2020.
My query is can i claim the amount paid towards stamp duty for tax exemption under section 80c for FY 2019-20?
You can seek tax benefit under 80C for FY 2019-20 if the house construction is completed and you take possession of the property before 31-Mar-2020.
HI,
1) Occupation Certificate from GOvernment
2) Building COmpletion Certificate from builder on his letter head
3) Registration of the property
Kindly let us know to avail the Interest benefit (2L) building certificate from builder is enough? or we need Occupation Certificate from government?
and if Registration of property is compulsory?
Thanks
Bharath
1. In order to claim the interest benefit, you can submit a completion certificate of the house property from the builder or a self-declaration from you (that the construction of the house property has been completed) to your employer.
2. Property registration is required.
Dear Gauthamji,
Hello !
I paid stamp duty charges for a flat on 28 jan 2016,possession is about to be offered in 7-10 days i.e. before 31st March,2016. Registry will be done till may 2016.
Is the amount of stamp duty applicable u/s 80 C for FY 15-16 ?
Kindly confirm it ASAP.
Regards
Yogesh C.
Yes, as long as you take possession before 31-Mar-2016.
Dear Gautham,
I had bought residential flat under resale in February 2014 and it is occupied me, by making full payment from my savings and friendly loans which carry no interest, I got possession in March 2014, And registration was done in the month of May 2014,
My Question here is
Can I claim deduction under 80c for making payment from my savings to buy house in A Y 14-15 ?
Can I claim deduction of stamp duty, registration in A Y 15-16 ?
Thanking You
Can I claim deduction under 80c for making payment from my savings to buy house in A Y 14-15 ?
Ans: No, you cannot. The tax benefit is available only for repayment of principal on housing loan taken from a specified set of bodies.
Can I claim deduction of stamp duty, registration in A Y 15-16 ?
Ans: Yes, but the stamp duty and registration fee must have been paid in AY 15-16. Stamp duty and registration fee incurred in earlier years cannot be used for tax benefit in AY 15-16.
I have purchased house & it is registered in my spouse’s name. can i get income tax benefit against 80c on stamp duty & registration fee?
If you are not the owner of the house property, you are not eligible to receive the 80C benefits.
Hi,
I have purchased a property through composite loan(plot+construction) on 30th mar2016(registration of plot took place on 31st mar2016),construction yet to be started,how i should mention this purchase in my 2015-2016 ITR Filing,Please suggest
You can claim benefit only after the construction is completed. Hence, you cannot show this in 2015-16 filing.
A flat was booked with Jaypee in 2010 and still under construction, possession not given till date . I was reading the advise given by you to others on this site and i could understand that no tax benefits will be allowed till I get the possession. My question is first.. if the possession is given after six or seven years will I be eligible to claim any tax benefits I.e principal and interest since the date of first bank loan instalment disbursement to builder is 2010. I am paying my loan instalment to bank regularly. Secondly ..If yes what amount can I claim after possession may be after six or seven years and under which section of IT.
Thanks,
If the possession is taken beyond 5 years (it was 3 the years until FY 2015-16) from the last date of financial year in which the loan was disbursed (we can assume that this is the year in which the last installment of the loan was disbursed), the interest benefit shall be a maximum of Rs 30,000 per year. The principal repayment prior to the year in which possession was taken shall not available for any tax benefit. Any principal repayment, after the possession is taken, shall be available for Section 80C benefit.
The relevant section for interest payment is Section 24 of the Income Tax Act.
Thanks, Mr. gautham that suggests I can claim entire home loan interest benefit paid since 2010 in subsequent years ( may be for next ten or fifteen years ) max of Rs.30000 per year or is there any limit that I can claim Rs 30000 only for two or three years after possession????
Regards.
Krishan k
The benefit shall be Rs 30,000 for all the years until the end of the loan.
Sir,
I have purchased a plot in the name of my spouse by taking loan. Thereafter I constructed house on that plot by the sale proceeds of house which was in my name and by taking loan from the bank. My wife is house-wife. Can I claim rebate on plot+construction loan, if yes, under which rules.
Regards
Sukhwinder Singh
If you do not own the house property, you cannot claim any tax benefit on the housing loan interest payment / principal repayment. In order to claim the benefit, you need to be a co-owner or a deemed owner of the property.
Hi,
i had purchased flat in Mumbai in 2012 and i got possession in May 2016.
Note: The building is yet to be issued Occupation Certificate. Builder had handed over keys and we are staying at that place. Can I claim Tax return on Interest amount for year 16-17?
Also the loan amount was under my family name which includes my mother, father and myself. Can i claim 100% for tax on interest ?
Can I claim Tax return on Interest amount for year 16-17?
Ans: Yes, you can. You will have to submit a self-declaration to your employer that the construction has been completed and possession has been taken.
Also the loan amount was under my family name which includes my mother, father and myself. Can i claim 100% for tax on interest ?
Ans: Since you co-own the property with others, you can claim the benefit to the extent of your share in the house property.
Hi,
I am going to buy 1 house property. It is going to complete on Aug,2016. I have paid 20% of the total amount of the property to builder and for the rest I have taken home loan from SBI.
Now, my question is, Can I get tax benefit on the amount I paid (20% of total) to the builder in FY2015-16?
As this is my 1st home, so acc. to the new rule, shall I get exemption on Rs.2.5lkhs for the interest that I will pay?
1. The 20% payment does not provide you with any tax benefit since the benefit is available only on housing loan interest. The 20% is payment for the property.
2. If you are a first home owner, you can avail the additional benefit subject to the conditions specified in law.
My completion certificate says it was completed in Aug 2015 and my possession letter is for July 2016. Can i claim all the tax benefits starting FY 16-17 or should i have to oblige to Completion certificate and claim tax benefits in FY 15-16. And note that the registration is only happening in July 2016
I am asking this because, i have no income to claim deduction this year 15-16, next year i will have rental income. So please let me know if i can file taxes starting FY 16-17?
You can claim tax benefit starting FY 2016-17.
Dear Sir,
I have taken housing loan from company the Flat construction completed on 15th March 2016. From the above topic, I understood that the I can claim the interest benefit for FY2015-16. As the house is completed in March 16, there is no rental income, is it necessary to show the notional income.
Thanks in advance.
Regards,
Murali.
You need to show the notional income if have you have another property and have declared that as self-occupied. If this is your only property and you are using it yourself, you can declare it as self-occupied and need not calculate any notional income.
Thanks for the prompt reply. One more question please. Is it required to show the notional income for the full financial year? I am having this doubt because the property is completed only in 15th March 2016, is it good to show the notional income for the full FY 2015 16? Thanks again. For info, I have two more houses, the small one, where my parents residing is shown as self occupied and the other one is on rent, for which I am already claiming the interest exemption.
Yes, you have to show the notional income for the full year. This is because you can claim the interest benefit for the full year.
Thanks a lot for the prompt reply….
I booked flat in April 16. OC has received in May16 only ..ie is construction is completed. I have taken loan and paid Stamp duty and registration.. but I am not taking possession since I have to pay some charges to builder. can I claim stamp duty and registration and interest benefit in fy 2016-17 though I have no possession letter.. I can produce CC and OC from Building ? will Income tax Dept will rely on possession letter for benefit under section 24b and 80C
You can claim benefit under sections 24 and 80C if you can be assessed for Income from House Property for the property in question. The Department requires nothing more than a self-declaration that the construction is complete. If you have not taken possession, it may mean that you have not occupied (or cannot occupy) the house or for that matter let out the house on rent. That, in turn, could mean that you cannot take any benefit under sections 24 and 80C.
home loan taken on april 2015. probable possesion : dec 2017.when to submit interest certificate to emplyer?
Please check with your employer on this. Organizations typically seek the interest certificate from employees sometime in Feb or Mar.
do i need to submit every year ,even though the possession is in dec 2017
You need to submit the proof for housing loan interest payable and principal repayment every year from 2017-18 onward in order to claim the benefit.
i have booked a under construction flat of rs 45 lakh on nov’16
flat likely to be handed over on july’17
i have paid rs 5 lakh to builder from nov’16 to march’17
i have to pay rs- 7 lakh more to builder from apr’17 to jully’17
home loan likely to be sanction on march’17..
Q1)can i get any 80c deduction for paying above said rs 5 lack to builder for FY2016-17????
Q2)can i get any 80c deduction for paying above said rs 7 lack to builder for FY2017-18??????
80C benefit is available only for expenses such as stamp duty/registration fee and principal repayment on housing loan. Payments to the builder for purchase of property will not qualify for 80C benefit.
Also, any 80C benefit can be claimed only after construction is complete.
Can i claim 80c and 24b for house repair loan
80C – Benefit not available
24 – Benefit available
Being retired employee having pension & interest income-from my investment in mutual funds,savngs. Family of unemployed son& house wife have no other source of income. I want to buy flat on the name of my wife as there is concession for women on stamp duty in Punjab. We have also formed HUF with sale price of one floor of building acquired. as ancestor property by way of will from my mother. I am already availing benefit under section 80 – c by paying premiums of insurance of my family members . Please guide me whether there will be any problem from income tax department in future. Please reply and oblige .
Can you please elaborate on the “problem from income tax department” you have referred to?
Sir, I have purchased a plot in Oct 2015 and construction started in Jan 15 only nd map from MDA has also been passed in that year only I.e 2015-16… I have paid stamp duty for the plot nd return has already filed timely in
AY 2016-17 now I want to revise the return can I take the benefit of stamp charges paid in 80c
If the construction was not completed in FY 2015-16, you cannot claim the Section 80C benefit in FY 2015-16.
Hi,
This is regarding how to avail tax benefits on Home Loan if opted for paying full EMI(Principal+Interest) from the beginning (under construction stage).
I took home loan in 2015 May for an under construction flat, since then I have been paying full EMI including both interest and principal amount.
I read an article that we should not claim interest or principal repayments for tax benefits for an under constructed home and we should only claim the interest amount paid during this period in 5 parts for 5 years after the possession.
But when I talked to my tax consultant in our office he was saying that I need to get PRE-EMI statement from the bank to avail the tax benefits for interest amount paid during the under construction. Since I opted for paying full EMI, the bank did not consider it as PRE-EMI and then can only provide provisional statement which contains both interest and principal repayments.
Please advise us that how can we get tax benefits for the EMI (Principal+Interest) paid during the under construction stage?
No interest/benefit can be claimed as long as the house is under construction. After the construction period is over, you can claim the benefit on the interest paid during the construction period as per the applicable tax rules.
i have purchased plot of land jointly with the flat scheme owner, i already paid stamp duty on half of the value of undivided share of plot. Now after construction of whole scheme that builder transferring 1 flat on my name, so my question is; is i am liable to pay any stamp duty on flat value or am i exempted for stamp duty as i already paid stamp duty on plot ???
Dear Gautham,
I really appreciate the time and effort you have taken to not only provide Information but also answer every persons query on your Blog!.
It shows your a gem of a person with great patience and good spirit with a really helpful nature.
I am not sure if you still check this blog since most of the comments were from years ago.
I have a similar query like some other folks, I have paid stamp duty and registration for a property this April 2017, the property is under construction and will be complete only by FEB 2019. So currently I am paying only Interest on Loan Disbursed.
It seems from the Questions of others and your comments that I would not be able to apply for tax benefit this year for amounts paid towards Stamp Duty and Registration as the Stamp Duty Reg and Loan Disbursement and Property completion must happen in the same year.
Let me know if I’m right or there is a chance for me to apply any kind of tax benefit in this year, if not then it seems like in the following years also I wont be able to apply for Stamp duty and reg, or even principle amount.
RGDS
Sonny
You said: “It seems from the Questions of others and your comments that I would not be able to apply for tax benefit this year for amounts paid towards Stamp Duty and Registration as the Stamp Duty Reg and Loan Disbursement and Property completion must happen in the same year.”
Gautham: Yes, you cannot avail any tax benefit on the stamp duty paid in Apr 2017 since your property is still under construction.
As per Section 80C of the Income Tax Act, the stamp duty should have been paid for a house property which can be considered for assessment under Income from House Property, for it (stamp duty) to be considered for tax benefit. In your case, while the stamp duty has been paid during the year, the property – since it is under construction – cannot be considered for assessment under income from house property. Consequently, 80C deduction is not available.
I purchased an under construction flat in 2010. Promised possession was in September 2011 but the project got delayed. The loan taken from SBI. First disbursement under the loan was done in December 2010. The last & fourteenth disbursement of loan happened in June 2014. As the OC was not granted by local body, builder did not give me possession letter. I am likely to get the possession in this financial year.
Will I be able to claim tax rebate on interest during the construction for equal installment starting from this FY, i.e. 2017-18?
If you get possession in FY 2017-18, you can claim the tax benefit in the year.
i have purchased a plot on my mother’s name. can i get tax benefits on stamp duty and registration?
You should be a owner of the property in order to avail tax benefits.
I have not claimed pre construction interest for four years after completion. Can I claim it now in five installments? Please guide me
Section 24 of the Income Tax Act states that the total pre-construction interest “shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years.”
If you missed claiming the benefit for 4 years, you can:
a. Claim the benefit in the fifth year.
b. Refile your tax return and claim the benefit for the previous 4 years.
I have sold flat before 5 years and did claim housing loan principle in last 3 year. Now need to revers that but my 80c investment are are higher than limit of 1.5 lac. Even if I exclude housing loan principle shown in 80c still my investments are matching limit of 1.5 lac.
question is in such case still I need to reverse principle amount and add into income or not where investments are higher than 80c limit
Are you saying that you claimed tax benefit on home loan even after selling it?
If the answer is yes, then you need to recompute your tax liability for each of the years (during which you claimed tax benefit) without loan principal benefit, pay the tax, if any, with penalty and refile your tax return.
I purchased house in sept 2016. Registration and complete disbursement done in March 2017.
Can I claim interest benefit for FY16-17 against interest and principle paid between sept16 to march17?
Yes, you can, provided the house was for ready for occupation in FY 2016-17.
i purchased a house for 40 lakhs which is completed and have building no from corporation by a home loan of 30 lakhs and another 10 lakhs loan from society. but the registration amount is 15 lakhs .
1. is it possible to claim both interset up to 2 lakhs and balance in 80EE
2. is it possible to claim principle in 80C
3. is it possible to claim registartion taxes in 80C
The answer is yes to all your questions.
I have purchased Site during Dec, 2015 Construction activity has not taken up so far. Now (FY 2017-18) Can I Claim Income tax benefit on Stamp duty & Registration Charges Which I had paid during registration.
Please give the details at the earliest.
regds,
Amarnath M
No, you cannot.
I have bought an under construction property. Registration will be done this month i.e. August, 2017. Builder has confirmed that I will get the possession in March, 2018 and the same will be mentioned in registry as well. He will provide the possession letter in March, 2018 but completion certificate will be provided in May, 2019. In this case, can I claim the below amounts for tax benefit this financial year?
1. Stamp Duty and Registration Charges
2. Principal Payment
3. Interest Payment
Small Correction: Completion certificate will be provided in May, 2018.
Yes, you can. The key condition is that the house property should be available for either self-occupation or letting out by March 2018.
Hi ,
I had purchased a Flat in 2015 and was availing pre-Emi facility from that time .I have got the possession of the Flat in April 2017 but the Flat is not registered in my name yet .
I have still not started paying the principle amount .Can i avail tax benefit for the Interest i have paid from 2015 without registering the property ?
No, you cannot. You should own the property in order to claim the tax benefit.
Municipal tax can be claimed under 80C every year from 2017-18 FY…?
The 80C benefit should be claimed in the same year of municipal tax payment.
Sir,
I have registered my plot cum house construction land on jun 14,2017 and construction inprogress now and started paying my emi’s from 5th jul 2017 and expected to complete by March 2018 , so
1) Am i eligible for claiming Principle (80C) and Interest (24B) amount under Income tax submission for 2017-18 year ?
2) Can i claim stamp duty charges under 80c for the 2017-18 year?
3) Currently staying in rented house from Apr-2017 to March-2018 ,am i eligible to claim rent allowance under IT for the 2017-18 year?
Venkat
1) Am i eligible for claiming Principle (80C) and Interest (24B) amount under Income tax submission for 2017-18 year ?
Ans: Yes, you are eligible provided the construction is completed before end of March 2018.
2) Can i claim stamp duty charges under 80c for the 2017-18 year?
Ans: Yes, provided the construction is completed before end of March 2018.
3) Currently staying in rented house from Apr-2017 to March-2018 ,am i eligible to claim rent allowance under IT for the 2017-18 year?
Ans: Yes, you can claim HRA exemption.
Hi,
I have booked an under construction home in March 16 where I had paid stamp duty and registration charges. 90% of the disturbment has been made.
Can I claim the stamp duty and registration in Fy 16-17 by filling revise ITR. ?
The completion of the property is yet pending which is possibly to get complete in March 17.
You can, only if the construction was completed in March 2017 or before in FY 2016-17.
my building has got occupancy certificate in 29th dec 2017, i have not yet taken possesion of my flat. Am i still eligible for tax rebate for interest under secton 24b for FY 2016-17.
If you have not taken possession, you cannot claim the tax rebate.
CAN I GET TAX EXEMPTION FOR THE STAMP DUTY & REGISTRATION FEES PAID FOR THE PLOT IN DEC-2018 ??
SORRY FOR DEC-2017
No, you can claim exemption only for house property and not for plot.
I booked a flat in August-2013. Now construction is over. but due to delay in possession, I am going to cancel the booking in March-2018. I have home loan and paid installments (Pre-EMI) from August-2013. can I take tax benefit under 80 C for all the installments paid. regards
No, you cannot.
I took a home loan in July 2011 for an under construction project. Possession is likely in September 2018 and loan will also fully disbursed at the same time . To the best of my understanding I can only get benefit of Deductions u/s 24 for Interest Payments upto Rs. 30,000 as construction period has crossed 5 years.
If I switch over existing loan to a new lender/bank , can I claim claim interest paid up to Rs 2,00,000 for self-occupied house? please advice
I do not think it is possible since your construction period has crossed 5 years.
Hi, I want to know what is the procedure to take tax rebate for home loan installment paid before acquiring possession letter from builder. As of now construction is completed and I have got possession letter too.
Calculate the total interest amount for the period prior to possession and divide the same by 5. Utilize each installment (the divided by 5 amount) towards interest benefit across the next 5 years (post possession).
Hi
Wish to inquire that in case a project is handed over in phases, Partial OC’s will be released to buyers, right? Can one claim pre EMI deduction under income tax on basis of Partial OC?
Yes, one can claim pre-emi deduction on the basis of partial OC.
Appreciate your efforts in replying all the queries.
Whether stamp duty ,regn charges paid to buy RESALE FLAT by the tax payer n occupied by the taxpayer can be claimed u/s 80c(2)(xviii)d.Some websites declare that the claim is ONLY for NEW FLATS/HOUSES.Kindly clarify.
with regards,
K.Ramachandran
There is nothing in law which prohibits tax benefit (80C) on stamp duty paid for resale of flats.