Pre-Construction Interest for Let out property

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  1. Ashish Jalan

    Ashish Jalan New Member


    I have a home loan for a property which was completed in April 2014. The loan is there since 2008.

    I have two questions for which I think I know the answers but Can someone please confirm.

    (1) Pre-construction interest - It is allowed for let our property. I think YES but need confirmation.

    (2) Completion of construction within 3 years - Does the house needs completion within 3 years from the date of final loan disbursement to claim the full interest deduction (i.e. not limited to 30K or 150K) being let out - NOT APPLICABLE for let out property and full interest including pre-construction (without any limit) is available. Is this correct?

  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    1. Pre-construction interest is allowed to be claimed after completion of construction in case of both self-occupied as well as let out property.
    2. In case of Let-out property - if the construction is not completed within 3 years - then also the total interest would be allowed to be claimed as a deduction under Section 24
  3. Reply: Interest on pre-construction period: Interest payable by an assessee in respect of funds borrowed for the acquisition or construction of a house property and pertaining to a period prior to the previous year in which such property has been acquired or constructed, to the extent it is not allowed as a deduction under any other provision of the Act, will be deducted in 5 equal instalments, commencing from the previous year in which the house is acquired or constructed.
    Interest on borrowed capital ( of the current year and pre-constructin period) is deductible, [Rs. 1.50 lacs from Asst. Year 2002-03 to 2014-15] and [ Rs 2 lacs from the Asst year 2015-16 onwards] subject to the following conditions: (i) capital is borrowed on or after 1.4.99, (ii) the acquisiton or construction should be completed within 3 years from the end of the financial year in which the capital was borrowed and (iii) the person extending the loan certifies that such int. is payable in respect of the amount advanced for acquisition or construction of the house.
    It is to be noted that there is no stipulation regarding the date of commencment of construction. Consequently the constructions could have commnced before 1.4.99 but if the aforesaid three conditions are satisfied the higher deduction of Rs 1.50 lacs ( or Rs 2 lacs from Asst year 2015-16) would be available.
  4. Ashish Jalan

    Ashish Jalan New Member

    Thanks a lot Mr. Gaurav for the very prompt response.
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