I have a residential flat. I am residing in it. I have booked another flat in Dec- 2011, which is yet under construction. Mu payment plan is construction based and paid 90% to the builder. I have taken home loan from bank for this flat. Bank is disbursing loan since beginning to the builder and I am paying EMI for this loan. Please tell me whether interest and principle component of this loan is eligible for rebate of Income tax in any form.
Mishracpwd-During under construction period, you no longer get tax benefit under Sec.80 C (Principal part of EMI) and Sec.24 (Interest part of EMI).
However, the total interest paid during the under construction period can be claimed under Sec.24 in five equal instalments along with your regular interest for the year.
In case you sell such property within 5 Yrs from the end of the FY in which construction is completed it has tax implications.
Sir, kindly clarify about "interest of construction period can be claimed in five equal installments. " It means total interest paid from beginning, can be claimed in next five years, ie. 1/5th part of total, in next each year ( In 5 Years) after possession.