The tax benefit on home loan for under construction property before possession is more limited compared with a ready-to-move-in home.
Interest paid during the construction/ pre-possession period is not immediately eligible for deduction under Section 24(b).
Once the construction is complete and you take possession, that accumulated pre-construction interest can be claimed but only in five equal annual installments.
For a self-occupied house, the total interest deduction (current-year interest + installment of past interest) is capped at Rs. 2 lakh per financial year.
If the construction is not completed within 5 years from the end of the FY when the loan was sanctioned, the interest deduction limit drops to only Rs. 30,000 per year.
Deductions under Section 80C (up to Rs. 1.5 lakh per year) are allowed only after possession i.e., after the property construction is complete. Pre-possession principal repayments don’t qualify.
Stamp duty and registration charges paid at the time of property registration can also be claimed under 80C (when applicable), but again only after you complete acquisition/possession.
If you are a first-time home buyer, took a loan between 1 April 2019 and 31 March 2022, your property’s stamp duty value ≤ Rs. 45 lakh and you had no other residential property on loan-sanction date.
You could claim up to Rs. 1.5 lakh extra deduction on home loan interest even for under-construction property. This deduction is over and above Section 24(b)’s Rs. 2 lakh limit.
No deduction for principal repayments under 80C. Pre-construction interest cannot be claimed immediately; it only becomes deductible later, over five years after possession, under Section 24(b).
Possible additional deduction under 80EEA (if you meet conditions) on interest even during pre-construction period.
This is all about the tax benefit on home loans for under construction property before possession.
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What are the Tax Benefit on Home Loan for Under Construction Property before Possession?
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2025-11-28T16:23:40+00:00 2025-11-28T16:23:43+00:00Comment
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