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Tata Capital > Blog > Can I Claim Income Tax Exemption on Loan Taken for Under-Construction Property?

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Can I Claim Income Tax Exemption on Loan Taken for Under-Construction Property?

Can I Claim Income Tax Exemption on Loan Taken for Under-Construction Property?

The idea of buying an entirely built and fully furnished house or office is indeed appealing. Further, if you fulfil home loan eligibility criteria and are sanctioned housing finance, you may be tempted to seal the deal even faster. But, before that, take a step back to consider that complete properties might just end up costing you more than you can afford.

This is why, in certain scenarios, purchasing an under-construction property can work in your favour as you can get a price quote that is 20% lower than you get on a completed one. Moreover, you can also get housing loan tax exemption for under-construction propertyin addition to other financial advantages.

Tax exemption on home loan interest for under-construction property

You can claim a tax exemption of up to Rs. 2,00,000 on the interest payments made in a year and deductions of up to Rs. 1,50,000 on the principal amount paid, under Section 80C of the Income Tax Act (ITA).

It is worth noting that the tax reliefs are not applicable in case the loan amount is utilised for renovation purposes.

Further, Section 24 of the Income Tax Act states that an under-construction property is free from any type of tax for interest paid on EMIs. Also, tax exemption is inapplicable if the housing loan for an under-construction property is availed for purchasing a plot.

Bonus tip: Ensure you check and compare various home loan ratesvigilantly, before applying.

Additional Read: Which One is Better? Under- Construction or Ready-to-Move-In House

Tax benefits when you take housing finance for an under-construction property

  • You can save more on your full interest payment.
  • You can claim tax benefits even for the registration fee and stamp duty on your under-construction property.
  • As mentioned above, under-construction real estate is relatively low-cost – the resources needed to buy one would be fewer. Therefore, the EMI to be paid would also be smaller. Before applying for housing finance, make sure to check your potential EMI with an online home loan EMI calculator.
  • Owners can start availing tax deductions on interest accumulated on their housing loan, even when the property is in the pre-construction stage.

Additional Read: Everything You Need to Know About Tax Benefit on Home Loans

Parting thoughts

Do you want a trustworthy lender to fund your property construction requirements? If yes, then look no further than Tata Capital’s customisable housing finance offerings. We offer affordable home loan interest rates to suit every pocket. You have the option to choose a flexible housing loan tenure and principal amount as per your convenience.

Furthermore, check out our EMI calculator for home loan to get a clearer idea of what to expect from us in a transparent way.

Don’t wait for much longer! Place a call to talk to our experts or log on to our website to get detailed information about our plans.

Get in touch with us today!

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