{"id":29927,"date":"2025-09-13T14:45:58","date_gmt":"2025-09-13T09:15:58","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=29927"},"modified":"2025-09-28T01:26:06","modified_gmt":"2025-09-27T19:56:06","slug":"home-loan-interest-exemption-on-under-construction-property","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/","title":{"rendered":"Home loan interest exemption on under-construction property"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d4935cd2a58\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d4935cd2a58\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/#For_an_under-construction_house_the_tax_treatment_of_home_loan_interest_is_a_bit_different_from_a_ready-to-move_property\" title=\"For an under-construction house, the tax treatment of home loan interest is a bit different from a ready-to-move property.\">For an under-construction house, the tax treatment of home loan interest is a bit different from a ready-to-move property.<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/#Interest_During_Construction_Pre-Construction_Interest\" title=\"Interest During Construction (Pre-Construction Interest)\">Interest During Construction (Pre-Construction Interest)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/#After_Construction_Completion_%E2%80%93_Regular_Interest_Post-Construction_Interest\" title=\"After Construction Completion &#8211; Regular Interest (Post-Construction Interest)\">After Construction Completion &#8211; Regular Interest (Post-Construction Interest)<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/#If_completed_within_5_years_from_end_of_the_FY_in_which_loan_was_taken\" title=\"If completed within 5 years (from end of the FY in which loan was taken):\">If completed within 5 years (from end of the FY in which loan was taken):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/#If_completed_after_5_years\" title=\"If completed after 5 years:\">If completed after 5 years:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/#Principal_Repayment\" title=\"Principal Repayment\">Principal Repayment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/#When_Under-Construction_House_is_Sold\" title=\"When Under-Construction House is Sold\">When Under-Construction House is Sold<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/#Home_Purchase_Buy_in_Cash_vs_Take_a_Home_Loan\" title=\"Home Purchase: Buy in Cash vs Take a Home Loan\">Home Purchase: Buy in Cash vs Take a Home Loan<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/#Recommendation_Guide_on_Buy_in_Cash_vs_Take_a_Home_Loan\" title=\"Recommendation Guide on\u00a0Buy in Cash vs Take a Home Loan\">Recommendation Guide on\u00a0Buy in Cash vs Take a Home Loan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/home-loan-interest-exemption-on-under-construction-property\/#In_Summary\" title=\"In Summary:\u00a0\">In Summary:\u00a0<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-29928\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/09\/ITR-.png\" alt=\"ITR \" width=\"949\" height=\"1398\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/09\/ITR-.png 397w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/09\/ITR--204x300.png 204w\" sizes=\"(max-width: 949px) 100vw, 949px\" \/><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"For_an_under-construction_house_the_tax_treatment_of_home_loan_interest_is_a_bit_different_from_a_ready-to-move_property\"><\/span><span style=\"color: #000080;\"><strong>For an under-construction house, the tax treatment of home loan interest is a bit different from a ready-to-move property.<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Interest_During_Construction_Pre-Construction_Interest\"><\/span><span style=\"color: #000080;\"><strong>Interest During Construction (Pre-Construction Interest)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Not deductible during construction. It\u2019s Called Pre-construction Interest. You cannot claim interest deduction U\/s \u00a024(b) until the construction is complete.<\/li>\n<li>Once construction is completed (i.e., you get possession or the completion certificate), the total interest paid during the construction period can be claimed in five equal annual instalments.<\/li>\n<li>The first instalment is claimable in the year in which construction is completed\/possession is taken.<\/li>\n<li>We can understand via example like Suppose you paid INR 4,00,000 interest during construction (Duration of 2019\u20132024). Construction completed in FY 2024-25. From FY 2024-25 onwards, you can claim INR 80,000 (i.e., 1\/5th of INR 4,00,000) each year in addition to the regular interest of that year.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"After_Construction_Completion_%E2%80%93_Regular_Interest_Post-Construction_Interest\"><\/span><span style=\"color: #000080;\"><strong>After Construction Completion &#8211; Regular Interest (Post-Construction Interest)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-24780\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/05\/Secion-24photo_2023-06-23_00-12-02.jpg\" alt=\"house property Deduction\" width=\"1080\" height=\"933\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/05\/Secion-24photo_2023-06-23_00-12-02.jpg 1080w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/05\/Secion-24photo_2023-06-23_00-12-02-300x259.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/05\/Secion-24photo_2023-06-23_00-12-02-1024x885.jpg 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/05\/Secion-24photo_2023-06-23_00-12-02-768x663.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/05\/Secion-24photo_2023-06-23_00-12-02-800x691.jpg 800w\" sizes=\"(max-width: 1080px) 100vw, 1080px\" \/><\/h2>\n<p><span style=\"color: #000080;\"><strong>Once the house is completed, you can claim the regular annual interest on home loan (subject to limits):<\/strong><\/span><\/p>\n<ul>\n<li>\n<h4><span class=\"ez-toc-section\" id=\"If_completed_within_5_years_from_end_of_the_FY_in_which_loan_was_taken\"><\/span><span style=\"color: #000080;\"><strong>If completed within 5 years (from end of the FY in which loan was taken):<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<ul>\n<li>Pre-construction interest : claimable in 5 equal instalments starting from the year of completion\/possession.<\/li>\n<li>Self-occupied property: Maximum deduction of INR 2,00,000 per year U\/s 24(b). For a self-occupied house, the total deduction (current year + pre-construction portion) is capped at INR 2 lakh per year.<\/li>\n<li>Let-out property: No maximum cap; you can claim the entire interest (but set-off of loss under \u201cHouse Property\u201d is limited to INR 2,00,000 against other heads in a year, balance carried forward for 8 years). For a let-out house, the entire interest is allowed (no cap, but set-off limited to INR 2 lakh per year; balance carried forward).<\/li>\n<\/ul>\n<ul>\n<li>\n<h4><span class=\"ez-toc-section\" id=\"If_completed_after_5_years\"><\/span><span style=\"color: #000080;\"><strong>If completed after 5 years:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<ul>\n<li>For self-occupied house : deduction restricted to INR 30,000 per year (including pre-construction interest).<\/li>\n<li>For let-out house : full interest allowed (same set-off rule as above).<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Principal_Repayment\"><\/span><span style=\"color: #000080;\"><strong>Principal Repayment<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Deduction for principal repayment U\/s \u00a080C (up to INR 1.5 lakh) is available only after construction is completed and possession is taken.<\/li>\n<li>Construction should be completed within 5 years from the end of the financial year in which the loan was taken.<\/li>\n<li>If not completed within this period, the maximum deduction for self-occupied property reduces from INR 2,00,000 to INR 30,000 per year.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"When_Under-Construction_House_is_Sold\"><\/span><span style=\"color: #000080;\"><strong>When Under-Construction House is Sold<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Cost of acquisition: Can include the interest paid on the home loan (if not already claimed as deduction).<\/li>\n<li>Capital gains: Exemption possible U\/s \u00a054 if reinvested in another house property, subject to conditions.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Home_Purchase_Buy_in_Cash_vs_Take_a_Home_Loan\"><\/span><span style=\"color: #000080;\"><strong>Home Purchase: Buy in Cash vs Take a Home Loan<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-30077\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/09\/HOME-LOAN.jpg\" alt=\"Buy in Cash vs Take a Home Loan\" width=\"999\" height=\"999\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/09\/HOME-LOAN.jpg 594w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/09\/HOME-LOAN-300x300.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2025\/09\/HOME-LOAN-150x150.jpg 150w\" sizes=\"(max-width: 999px) 100vw, 999px\" \/><\/p>\n<div class=\"___i31lg00 f10pi13n f14t3ns0 f1nbblvp fat0sn4 f1ov4xf1 fekwl8i f1lmfglv f1oz7aqm f1abmfm4 f1w619qj f16h0jq8\">\n<table class=\"___1hm93bs f1ddd56o f16vktn6 f1enuhaj fdclmfp f1ev3kgc ftgm304 f1uinfot fibjyge fvueend f9yszdx f1fu4s3n f3l3pb3 f1s2k7dp f8fmt76 fjvbh62 fysh76l fic4ptz f1yenhzu f1yn6nvh f14tj6oe f1jq587y f1el8yx3 f1pymoxg f1ofu761 fe6itr f7coize f1794535 f70r78m f4zgifc fk1v6el f16pyhcb fo436u6 fzy4j18 fc43013 f1hmrcvb fc4t9fq fgp09rh fjnyn6r\" style=\"height: 416px;\" width=\"952\">\n<thead>\n<tr>\n<th><strong>Aspect<\/strong><\/th>\n<th><strong>Buy in Cash<\/strong><\/th>\n<th><strong>Take a Home Loan<\/strong><\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<th scope=\"row\"><strong>Pros<\/strong><\/th>\n<td>&#8211; No EMI burden<br \/>\n&#8211; Peace of mind<br \/>\n&#8211; No interest cost<br \/>\n&#8211; Immediate ownership<br \/>\n&#8211; No rate hike risk<br \/>\n&#8211; Strong negotiating power<\/td>\n<td>&#8211; Liquidity safety<br \/>\n&#8211; Tax benefits (\u20b92L interest u\/s 24 + \u20b91.5L principal u\/s 80C)<br \/>\n&#8211; Inflation advantage<br \/>\n&#8211; Potential higher returns<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\"><strong>Cons<\/strong><\/th>\n<td>&#8211; Savings locked in one asset<br \/>\n&#8211; Missed investment returns<br \/>\n&#8211; Limited emergency liquidity<\/td>\n<td>&#8211; EMI stress (~\u20b986k\/month)<br \/>\n&#8211; Interest outgo ~\u20b91.07 crore<br \/>\n&#8211; Risk if investments underperform<br \/>\n&#8211; Income dependency<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\"><strong>EMI<\/strong><\/th>\n<td>Nil<\/td>\n<td>~\u20b986,000\/month<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\"><strong>Total Outgo<\/strong><\/th>\n<td>\u20b91 crore (house value)<\/td>\n<td>~\u20b92.07 crore (principal + interest)<\/td>\n<\/tr>\n<tr>\n<th scope=\"row\"><strong>Tax Impact<\/strong><\/th>\n<td>No tax benefits<\/td>\n<td>Deduction up to \u20b93.5 lakh\/year<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<hr \/>\n<h3><span class=\"ez-toc-section\" id=\"Recommendation_Guide_on_Buy_in_Cash_vs_Take_a_Home_Loan\"><\/span><span style=\"color: #000080;\"><strong>Recommendation Guide on\u00a0<\/strong><strong>Buy in Cash vs Take a Home Loan<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"color: #000080;\"><strong>Buy in Cash If:<\/strong><\/span><\/p>\n<ul>\n<li>Person are risk-averse or nearing retirement<\/li>\n<li>In case Person value peace of mind and debt-free living<\/li>\n<li>Person want to avoid EMI burden and interest costs<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Take a Home Loan <\/strong><\/span><\/p>\n<p>If\u00a0 person are young (&lt;40) with stable income &amp; person can invest remaining savings smartly (e.g., equity, mutual funds, business)<\/p>\n<h3><span class=\"ez-toc-section\" id=\"In_Summary\"><\/span><span style=\"color: #000080;\"><strong>In Summary:\u00a0<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>You get tax benefit on interest only after possession, not during construction.\u00a0No deduction allowed during construction. After completion:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Pre-construction interest: Claim in 5 equal instalments.<\/li>\n<li>Regular interest: INR 2 lakh max (self-occupied), full amount (let-out).<\/li>\n<li>The 5-year rule is crucial: finish construction within 5 years to enjoy the INR 2 lakh benefit (instead of just INR 30,000).<\/li>\n<li>Principal: Section 80C benefit available<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>For an under-construction house, the tax treatment of home loan interest is a bit different from a ready-to-move property. Interest During Construction (Pre-Construction Interest) Not deductible during construction. It\u2019s Called Pre-construction Interest. You cannot claim interest deduction U\/s \u00a024(b) until the construction is complete. Once construction is completed (i.e., you get possession or the completion &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[150],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/29927"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=29927"}],"version-history":[{"count":4,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/29927\/revisions"}],"predecessor-version":[{"id":30080,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/29927\/revisions\/30080"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=29927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=29927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=29927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}