Benefit under section 24

[naresh makkar]

My wife booked a flat in Ashiana Utsav Bhiwadi in March,2006. The flat is under construction and possession is likely to be offered in March,2008. She raised a loan of Rs.15.95 lacs for this flat from HDFC in Apri,2006. She is regularly paying her EMI's since May,2006. Kindly let me know if she can claim the benefit of repayment of Principal and intt under section 24 (Loss on house property) for the F.Year 2006-07 and F.Year 2007-08

[Surender Gupta]

The interest would get accumulated till the acquisition of property. Since you did not possess the property, the benefit of deduction of interest is not available

[Guest]

Interest on repayment of loan paid in the financial year on which the house is acquired/construction is completed is eligible for deduction u/s 24 in the same financial year. Interest on EMI paid relating pre-construction period is eligible for deduction in five equal instalments only from the financial year in which the property is acquired/construction is completed. Repayment of principal is eligible for deduction u/s 80C from the financial year of construction/acquiring of house property.

[Guest]

the interest accumulated till 31.03.2007, can be claimed in 5 equal installment from the financial year 2007-08.The interest paid for 2007-08 can be claimed as loss from house property up to rs. 1.50 lakhs, and the payment of principal can be claimed under sec. 80 c to ccc as deduction limited to rs. 1.00 lakhs.pl note that for availing the benefit of interestand principal the house should be ready and in possession before 31.03.2008

AI Summary

Pre-construction interest deduction may be claimed in five equal installments from year of possession, principal deductible under 80C thereafter. Pre-construction interest accumulated until acquisition/completion is deductible in five equal annual installments starting in the year of acquisition or possession; interest paid in the year of acquisition/completion is deductible that year as loss from house property within the applicable ceiling. Principal repayment is deductible under the principal repayment deduction provisions from the year of acquisition/completion, and possession before year-end is required to claim these benefits.