Tax deduction on Home Loan interest paid

Income Tax
1

Hi Team

I purchased first property on May23 and and i getting possession on Feb’25 as construction is getting completed
I have been paying Pre EMI till now. Additionally i have been staying on rent in same city

Now i want to understand how can i claim all EMI ( Pre interest ) paid till now and under which section can i get that deduction in this year ITR.

2

If you purchased your first residential property in May 2023, are getting possession in February 2025, and have been paying Pre-EMI (interest-only) while also living in a rented house in the same city, your question is very common—and completely valid.

Let me explain this step by step in simple terms, as per Indian Income Tax rules.

What is Pre-EMI and Pre-Construction Interest?

· Pre-EMI consists only of interest, not principal.

· Any interest paid before possession is called Pre-Construction Interest.

· This interest cannot be claimed immediately while the house is under construction.

In your case:

· Pre-EMI paid from May 2023 to January 2025 = Pre-construction interest

When can you start claiming Pre-Construction Interest?

You can claim it only after possession, i.e.:

· From FY 2025-26 (AY 2026-27) onwards

· Since possession is in February 2025, the house is considered completed in FY 2024-25

How is Pre-Construction Interest claimed?

As per Section 24(b) of the Income Tax Act:

· Total pre-construction interest is aggregated

· It is then claimed in 5 equal annual instalments

Example:

If your total pre-EMI interest paid is ₹5,00,000, then:

· ₹1,00,000 per year can be claimed

· For 5 consecutive years, starting from FY 2024-25

Which Section allows this deduction?

Section 24(b) – Interest on Home Loan

· Maximum deduction for self-occupied property:
₹2,00,000 per year

· This limit includes:

o Current year interest

o

§ 1/5th pre-construction interest

If the house is let out, there is no ₹2 lakh cap (subject to loss adjustment rules).

Can you claim HRA and Home Loan benefits together?

Yes, absolutely

Since:

· The house was under construction

· You were living in a rented house in the same city

You can claim:

· HRA exemption under Section 10(13A)

· AND later claim home loan interest under Section 24(b)

There is no restriction on claiming both in such a situation.

What you CANNOT claim in this year’s ITR (FY 2024-25)

You cannot claim pre-EMI interest immediately in FY 2024-25
You cannot claim principal (Section 80C) before possession

What you CAN claim after possession

Once possession is received (Feb 2025):

· Interest deduction → Section 24(b)

· Principal repayment → Section 80C (from next FY)

· Pre-construction interest → 1/5th per year for 5 years

Key Takeaway (In Simple Words)

· Pre-EMI interest paid till possession is not lost

· It is allowed in 5 equal parts

· Deduction starts after possession

· Section applicable: Section 24(b)

· You can legally claim HRA + Home Loan benefits

If you’re filing ITR yourself, always keep:

· Home loan interest certificate

· Possession letter

· Loan sanction details

These documents help avoid future notices.

Hope this clears your doubt clearly

3

Hello @Vaibhav_Gupta,

The interest for pre-construction period can be claimed in in five equal annual instalments, starting from the financial year following the year in which you receive possession of the property under section 24(b).

So, once you get possession in Feb 2025, you can start claiming one-fifth of the total pre-construction interest from FY 2025-26 onwards

Hope this helps!

4

Home loan interest paid is eligible for tax deduction under the Income Tax Act, reducing your taxable income. This benefit helps homeowners save significantly while making property ownership more affordable.