PRE-CONSTRUCTION PERIOD INTEREST UNDER SECTION 24

QUESTION-

From- Pankaj

I had taken a home loan in may 2008 for under construction property. Construction was completed in 2011 and I was offered possession by authority in 2011. But I got the registry done in August 2013, as no development was there in that area. I didn't take tax benefit till now as in my company, they asked for possession letter. I am neither living in that house nor that is let out. It is vacant.

My queries are
1) As section 24 says "acquisition OR construction is completed". Can I take interest benefit from last year also (AY 2013-14) as construction was completed and I have offer of possession but myself by choice didn't take possession.
2) If I take tax benefit for interest paid before possession (20% in each year for next 5 year), max limit is  150,000 or (150,000 for this year+20% of previous interest.).
3 ) In case, if property is let out, then there is no limit of 150,000. Can we still take benefit of interest paid this year+20% of interest before possession?

ANSWER-

Hi Pankaj,

Thanks for posting query on our page. The point wise answers to your query are given below:

1. If you have the possession letter which is dated  in  A.Y. 2013-14, then you can claim your Pre as well as Post acquistion interest from the A.Y. 2013-14. But you should keep this is mind that the clause of 3 years would not be fulfilled in your case and your deduction will be limited only upto Rs. 30000.00 and not Rs. 150,000.00. If you show it a Let out property then you can claim whole amount of interest but you will also have to show notional rent amount.

2. The limit of Rs. 150000/30000 is including the Pre-construction period interest.

3. Yes, you can claim the Pre-construction period interest in case of Let out property also.

Hope this helps you. Feel free to contact further.