Pre construction interest

Income Tax Income from House Property
1

How to claim Pre construction interest?

2

Hey Shrey,

The Pre-construction Interest, is allowed as a deduction in 5 equal installments starting from the year in which the construction of the property is completed.

In order to claim such pre construction interest the taxpayer needs to file ITR-1 if no co-owner is present. Otherwise, you need to file ITR-2.

3

Need a clarification on Pre construction interest. I have availed a home loan in June 2020 & house construction got completed by March 2021. I have paid EMI from June, 2020 to March 2021. This includes interest of some 33000 rupees.
Do I need to claim this as preconstruction interest in 5 installments or can I claim it fully in FY 2020-21 itself, as my loan taken date & construction completion date falls in same FY 2020-21 ?

4

@Saad_C @Kaushal_Soni @Divya_Singhvi @Laxmi_Navlani @AkashJhaveri can you help with this?

1 Like
5

Hey @Sivaprakash_S

The deduction for pre-construction period interest is allowed in 5 equal instalments starting from the year in which the house is purchased or the construction is completed.

Here in your case, as completion of construction and interest payment period falling under the same year ie. FY 2020-21, then you can claim entire interest expense while filing ITR for FY 2020-21.

Read below article for more insights about pre-construction period:

Hope, it helps!

1 Like
6

@Kaushal_Soni Thank you for your response :slight_smile:
@Nireka Thank you too :slight_smile:

1 Like
7

Hi Team,

Please suggest how much maximum interest can be claimed post possession of house.

Example, Got property on 2024 and on that year my interest will be 2 lacs. Will i be able to claim additional loan interest of previous year also?

8

Hi @snehal_parikh, if it is a self occupied property then you can claim up to Rs. 2 Lakh. You can get to know the details better in the article mentioned below. Hope this helped.

9

Sir/mam,

I(first time buyer) purchased an plot for self occupation through Bank plot+construction loan and will pay interest 50,000 from December 2021 to March 2022 and Bank will give me construction Certificate in March 2022.
As i am government salaried person and submitted all tax details of FY2021-22 with Employer’s green sheet except pre-construction interest.

There are some questions of my above case only in which i have some confusion:

  1. When do we have to make this 50,000 claim:

    • Can i claim this interest amount at a time of ITR filling in July2022
      OR
    • Should i show up 50,000 amount in Employer’s Green Sheet of FY2022-23

  2. Under Section 24(B), Preconstruction interest can be claimed in 5 equal instalment after completion
    of construction.In My case,

    Home Loan Interest of FY2021-22 = 50,000 (10K + 10K + 10K + 10K + 10K)
    Home Loan Interest of FY2022-23 = 1,50,000

    How much interest amount of FY2021-22 can claim in Fy2022-23:: 50,000 or 10,000 ?

  3. Can anyone claim more than one installments at same time if the total amount does not exceed 2 Lakh by adding that installment amount ?

Regards

KS

10

@Anar_Desai, needing insights here.

11

Hey @Kuldeep_Singh,

The period from borrowing money until the construction of the house is completed is called the preconstruction period. You are receiving construction certificate in March 2022. So, we are assuming that the construction got completed in March 2022. Hence, Interest paid before March, 2022 will be pre construction interest. The interest will be allowed from the date of loan taken till the 31st March before the financial year in which construction is completed. This interest has to be divided in 5 equal installments and claimed every year for 5 years.
So, from FY 22-23, you can claim 10K (50K/5) every year as pre construction interest in your return of income.
As per the Act, the claim has to be divided in 5 years. So, you cannot make lumpsum claim.

For better understanding, please read the following article.

Hope it helps.

12

I had taken home loan of Rs 65 lakhs in 2017-18. The pre construction interest is Rs 17.5 lakhs. Construction was completed in 2021-22. Interest for 2021-22 is Rs 4.50 lakhs. How can and how much income tax rebate on pre construction interest and current year interest can I claim?

13

Hello @vinod08,

The total amount of pre-construction interest (1/5th) and current year’s interest that can be claimed in a year should not exceed INR 2,00,000/- under Income from House Property.

Hope this helps!