Home Loan Tax Benefit

Hi,

If an employee has borrowed a housing loan and the house is not completed but he is paying the emi’s.
Can the employee claim exemption on Interest/ principal amount of the loan instalment paid ?

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Hi,

Yes employee can avail Home Loan Tax Benefit even if an employee 'get possession but paying EMI’s on principal and interest.

I hope your query is answered with the above reply.

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Yes, the principal portion of the EMI paid for the year is allowed as deduction under Section 80C in the year of payment. The property should not be sold within five years of possession. Otherwise, the deduction claimed earlier will be added back to your income in the year of sale. This deduction will be within the overall limit of Rs 1.5 lakh mandated for 80C. The interest portion of construction period can be claimed only once you avail possession. It can be claimed in five equal instalments starting from the year of in which you received possession.

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@Nisha

Yes,You can claim tax deduction up to Rs 1.5 lakh under Section 80C for repayment of principal component of a home loan, availed for purchase or construction of the residential property.

Interest repaid on a home loan is classified in two categories i.e. interest pertaining to the pre-construction and post-construction period. As far as interest paid in the post-construction period for self-occupied property is concerned, tax deduction up to Rs 2 lakh can be claimed under Section 24b of the Income Tax Act.

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