When the property is fully constructed, the entire sum of the property cost is disbursed to the builder by the bank, hence when the person begins paying installments to the bank it is an EMI payment. EMI or what is known as Equated Monthly Installments has both the Principal as well as the Interest Component of the loan.<\/p>\n
For Income tax purposes if this is the first property and if the customer is paying principal and interest \u00a0 component; the property will be deemed to be Self occupied home and hence can claim benefits of<\/p>\n
80 C –\u00a0 within upper limit of Rs 1,50,000 for year \u00a02015 -2016<\/p>\n
Section 24\u00a0 – upper limit of Rs 2,00,000 for year\u00a0 2015 -2016<\/p>\n
B. When the Property is Under construction<\/strong><\/p>\n The entire sum for the property loan is not disbursed to the builder. A partial disbursement happens linked to stages of construction. The actual loan repayment will start only when the entire loan amount is disbursed to the builder. During the period of partial disbursements the borrower will have to pay pre-EMIs<\/strong>.\u00a0Pre \u2013 EMI<\/strong> is a scenario where only the interest accrued on the disbursed money is paid.<\/p>\n The advantage of this is the Interest is getting paid even while the property is getting ready and the time frame \u00a0 where the Pre EMI is paid when the property is getting ready is called as the Pre Construction Interest Section 24 Tax deduction for the pre-construction period, on the pre-EMIs,can be availed only after the\u00a0construction is\u00a0completed.<\/strong><\/p>\n Once the construction of the property is completed, one can claim deduction for the interest paid during the \u00a0 \u00a0 \u00a0 \u00a0 pre-construction period. This has to be done in five equal installments commencing from the financial year(FY) in which the construction of the property is completed<\/strong>.<\/p>\n Accordingly, the deduction towards aggregate interest (including one-fifth of pre-construction interest) can be Claimed from the FY in which the construction of the property is completed.<\/p>\n Here\u2019s an example home loan of\u00a0Rs.30 lakh in April 2013 at 10.5% interest for 20 years to buy an under-construction property, which was completed in March 2015. While construction was on, the total interest paid on the borrowed capital was around\u00a0Rs.3 lakh. Deduction on the interest of\u00a0Rs.3 lakh, over and above the yearly interest paid, in five equal installments of\u00a0Rs.60, 000 (Rs.300,000\/5) starting from the assessment year 2016-17(FY2015-16).<\/p>\n Note<\/strong>: In case of an Under Construction property for one to accrue the benefits of Section 24, if the property is not acquired\/constructed\/completed within 3 years from the end of the financial year when the loan was taken, in that case the benefit of Section 24 is only to the extent of Rs 30,000\/- and not Rs 1,50,000<\/p>\n
\n<\/strong>
\nNow since there is no principal payment involved section 80 C deduction cannot be claimed.<\/p>\n
![\"Pre](\"https:\/\/www.squareyards.com\/learning-portal\/\/wp-content\/uploads\/2016\/01\/Pre-EMI-Section-24.jpg\")
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