Tax rebate is available for home loan interest paid before taking possession.
Purchasing an under-construction home is common these days. As an income taxpayer, a person who makes a living is urged to pay close attention to any income tax breaks related to home loan repayment, while completing their income tax return (ITR). A house loan borrower may be eligible for an income tax credit on the repayment of home loan interest under Section 24 according to tax and investment experts (B). According to them, claims can be filed after taking possession of a property, but the rebate is also available for home loan interest that was paid in advance of taking possession.
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A home buyer can claim an income tax rebate under Section 24(B) on home loan interest payments made before taking possession of the unit in the subsequent five years following possession, according to income tax specialists. If you pay more than Rs 2 lakh in home loan interest in a single fiscal year, you won’t be eligible for the income tax credit.
Archit Gupta, the founder and CEO of Clear, commented on the income tax rule regarding apartments that are still under construction. “Only when the taxpayer actually owns the residence is the interest due or paid to build or acquire it permitted. However, he may continue to pay the interest until the house is finished. Once he owns the house, he may then claim the interest, which was paid over a five-year period in equal instalments. For self-occupied property, the interest claimed in this manner and the current year interest combined cannot exceed 2 lakhs.”
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Pankaj Mathpal, MD & CEO at Optima Money Managers, explained how a home loan borrower can claim an income tax rebate on home loan interest paid before possession: “Under Section 24(B) of the Income Tax Act, a homebuyer can claim a tax rebate on up to 2 lakh of home loan interest paid in a single financial year. The home buyer would pay both the EMI and home loan interest after taking ownership of the apartment. As time passes, the proportion of home loan interest in EMIs decreases, while the principal increases. In order to take full use of the provisions of the aforementioned section, one must first consider the amount of home loan interest that one would be required to pay during the assessment year.
