• Tax exemptions possible on under-construction property

Hi Team, 

I have purchased a FLAT in Pune which is UNDER CONSTRUCTION currently ( i.e year 2018 ) and its likely possession is in June 2019.

My home loan is ongoing and my monthly payout for the home loan emi is as below:

Principal Component: 27510.00 INR
Interest Component: 326730.00 INR

I want to know if any of the above amount can be deducted from my TAXABLE income or not ?

I currently fall in the 30% tax slab.
Asked 8 days ago in Income Tax from pune, Maharashtra
Hi,

No, you cannot claim any tax deduction on home loan in current year.

However, you can claim pre period interest i.e under construction periods in 5 equal instalments starting from the period of completion i.e. FY 2019-20. 

Principal component of your EMIs paid during prior period is not eligible for any tax deduction.

You can claim above interest in 5 equal instalments only after possession i.e.from FY 2019-2020.

Thanks & Regards,
Payal Chhajed
Payal Chhajed
CA, Mumbai
286 Answers

5.0 on 5.0

Hi

In the current year, no deduction can be claimed.

For interest upto 31st March 2019, deduction shall be allowed in 5 equal installments starting from FY 2019-20.

No deduction is allowed in respect of principal repayment for pre-construction period.
Lakshita Bhandari
CA, Mumbai
1647 Answers
43 Consultations

5.0 on 5.0

Hi,

Kindly remember that the aggregate limits under Section 24 are still applicable. The prior period interest instalment plus ‘normal interest’ is allowed to the extent of Rs 2 Lakh per year only in-case of a Self occupied property. There is no such restriction if the property is a ‘Let-out’ one.

Thanks & Regards,
Payal Chhajed
Payal Chhajed
CA, Mumbai
286 Answers

5.0 on 5.0

Hi,

The interest paid before possession and during construction of the property is termed as the pre-construction interest.
You can claim the benefit of this equally over a period of 5 years starting from the year in which you get possession.

So in your case, you will not be able to claim any deduction this year but starting FY 2019-20, you can claim the pre-construction interest over a period of 5 years.

Regards,
Nikhil
Nikhil Khanna
CA, Mumbai
830 Answers
4 Consultations

5.0 on 5.0

Hi,

You are not eligible to claim any tax deduction for this year.

You will be able to claim the deduction of aggregate interest paid during the pre-construction period in five equal installments starting from the year of completion of your property (I.e. FY 2019-20).

You can't claim any deduction for the principal repayment during pre construction period.
Abhishek Dugar
CA, Mumbai
3078 Answers
135 Consultations

5.0 on 5.0

Home loan deduction is available only after completion .
Interest paid will be pre-construction interest and deduction will be available in 5 equal installments after completion .Further principle component paid in these phase will not be available for deduction.
Swati Agrawal
CA, Indore
407 Answers

5.0 on 5.0

Hi,

Yes, Stamp duty & registration charges are allowed as a deduction under Section 80C. However, these expenses are allowed only for the ready property. The same is not allowed for underconstruction property.

"Please note that I was ONSITE from Dec 2016 to April 2018 and hence had a NIL tax for the FY [deleted] and same has been reflected in the tax filling for AY [deleted]." - What is your question in this sentence? Could not understand?
Abhishek Dugar
CA, Mumbai
3078 Answers
135 Consultations

5.0 on 5.0

There is no such provision. You can add the stamp duty cost to the cost of the property and take the benefit while selling the property. You cannot claim it against your salary income
Nikhil Khanna
CA, Mumbai
830 Answers
4 Consultations

5.0 on 5.0

Hi

Has the property been registered?
Stamp duty paid for the registration of the property is allowed as deduction under section 80C. However, it is allowed in the FY of actual payment of stamp duty. So, it could have been claimed in FY 2016-17 only.
Lakshita Bhandari
CA, Mumbai
1647 Answers
43 Consultations

5.0 on 5.0

Hi,

Hope you are doing well !

Yes, you can claim deduction for stamp duty & registration charges .It is allowed u/s 80C subject to actual payment i.e. it could have been claimed in FY 2016-17.

However, the same is not allowed for under construction property. 

Thanks & Regards,
Payal Chhajed
Payal Chhajed
CA, Mumbai
286 Answers

5.0 on 5.0

Hi,

You can start claiming these deductions from the next FY i.e 2018-19. Any interest paid prior to 2018-19 can be claimed in 5 equal annual installments as per the law starting from 2018-19 in your case.

Thanks
Damini
Damini Agarwal
CA, Bengaluru
246 Answers
12 Consultations

5.0 on 5.0

Dear Respected Client

Hope you are doing well

As I understand that you have 2 queries, one is for deduction on account of amount paid to Bank which includes Principal as well as int. And Second is for Registration Charges.

Please find below my point wise reply:

If your property is under construction then you can't claim deduction even u/s 24 or u/s 80C.
Deduction of principal repayment will be allowed from the year in which possession or completion certificate obtained. prior to that period no deduction will be allowed. Repayment of principal is allowed deduction is allowed u/s 80C which u can't avail as property is still under construction.
Section 24: Deduction will be allowed from the year in which which possession or completion certificate obtained. If property is self owned than maximum deduction of 2Lac can be obtained on account of repayment of interest. Interest prior to that year will be allowed in 5 instalment beginning from the year in which completion certificate obtained. 
Deduction of registration charges can also be claimed u/s 80C.

Hope you will find in order.
Varun Chawla
CA, Ghaziabad
67 Answers

5.0 on 5.0

- Interest upto 31.03.2019 can be cla imed in 5 equal installments as pre-construction period interest from A.Y. 2019-20 alongwith interest of current year i.e. F.Y. 2018-19. The overall limit of interest is Rs.2 lacs in case of self occupied property.

- Principal deduction u/s 80C can be claimed after the construction of the property and that too for the current year and not of the previous year. Also allowed on paid basis and not on due basis.

- Stamp duty and registration charges are allowed in the year of transfer of the property and on paid basis.

Thanks
Vivek Kumar Arora
CA, Delhi
995 Answers
19 Consultations

5.0 on 5.0

As per my opinion, stamp duty deduction can be claimed in year in which it is actually paid.
Swati Agrawal
CA, Indore
407 Answers

5.0 on 5.0

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