Home loan Interest rebate

I am residing in a house I have purchased on loan from my company for which I am repaying via monthly deduction from my salary. I have recently purchased another flat which is under construction. For this flat I have taken a home loan from a bank and am repaying an EMI of 30,000 PM most of which is interest component since the flat has not been handed over. Am I eligible for tax rebate on house loan interest for both the houses mentioned above. What will be the eligibility when the second house is handed over to me and I start residing in that one vacating the first one?

asked Feb 11 '11 at 13:05 by shekhs33 1111

You can start claiming interest and principal of your EMI from the year in which you get possession.

The interest component paid in years before possession year can be claimed in five equal installments after possession.
But in an year, max exemption for interest payment will be only be 1.5 lakhs. So in case actual year interest + previous year interest installment becomes more than 1.5 L, then you won't be able to get deduction more than 1.5 L.

On house loan principal repayment, exemption is only allowed after possession, under Income Tax act section 80C. You won't get any income tax benefit on the principal amount for the EMIs that you paid before getting possession of your house.

Also, As per [section 24 of income tax][1]: Interest is deductible if such acquisition or construction is completed within three years from the end of the financial year in which capital was borrowed, the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees.

Once you get possession, you can claim interest and principal components of home-loan on both the houses upto max limit of 1.5 lakhs (interest) and 1 lakh (principal under 80-C).

In case you rent out first flat, there won't be any limit on interest payment deduction for that house.

answered Feb 12 '11 at 02:44 by Pankaj Batra 5.2k320


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Asked: Feb 11 '11 at 13:05

Seen: 4,364 times

Last updated: Feb 12 '11 at 02:44