Know How to Get a Deduction on Your Home Construction Loan
Posted on July 23rd, 2020
To make the entire process of home loan repayment affordable, the Government of India extends several tax benefits to homebuyers. Depending on their case, borrowers can avail the suitable income tax benefits and claim deductions as and when required.
Conversely, homebuyers should take into account the different terms and conditions that are attached to the claim process of deductions.
Tax Benefits on Under-Construction Housing Property
Borrowers cannot claim their tax deduction on a house construction loan while the property in question is still under construction.
The home loan tax exemptions will be available as per the following –
Exemptions under Section 80C are not available for a property under construction. The benefits of the principal repaid can only be availed after the construction is complete.
Borrowers who have applied for a home construction loan can claim tax deductions on the interest paid. In this case, it can also be claimed only when the construction is completed.
To elaborate, the following offers a fair idea of this matter –
- Deductions can be claimed by them for a period of 5 years in the form of five equal installments.
- In the case of a self-occupied property, individuals can claim as much as Rs.2 lakh each year.
However, it must be noted that no claim for tax deductions on the principal is entertained on house construction loans availed for renovation or repair. For such loans, benefits are only extended for the interest paid under Section 24(b). The maximum amount that can be claimed as exemptions is restricted to Rs.30,000 in such cases.Also Read: Easy Way To Opt a Home Construction Loan in India