Purchasing a new home can be tough on your pockets, as the real estate prices are continually increasing. Many people opt for home loans to enjoy a smooth process of moving into their new homes, as today, the house loan rates are highly affordable and come with additional benefits.

However, another way to reduce the financial burden of purchasing a house of your own is by availing of under construction home loan tax benefits. Investing in an under-construction property can help you retain some cash, as there are a few tax exemptions you can apply for after acquiring the entirely constructed house. Besides, under-construction houses generally quote a lower price than constructed ones.

Here’s how you can avail of home loan tax benefits for under construction property.

Tax deductions on under construction property

If you purchase an under-construction property by taking a home loan, you can avail of home loan tax benefit for under construction property.

Suppose you buy a property that is being constructed and are currently paying the EMIs for the loan. In that case, you can claim tax deduction on the principal amount (up to Rs. 1.5 lakhs) under section 80C of the ITA.

Also, apart from deductions on the principal amount, you can also claim tax benefits on your home loan rate payments. 

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

Tax deductions on interest paid pre-possession of the property

Taking a house loan to purchase your dream home is now convenient and affordable, as you can claim the home loan interest rate as a tax deduction.

Yes, you can claim deductions on the interest paid on house loan before possession, albeit after the construction is complete and the property is ready for occupancy. However, you can only claim an amount of up to Rs. 2,00,000 in this case.

Meanwhile, the interest you pay before possession gets accumulated. Once you claim a tax exemption on this interest, you can reclaim this amount in five instalments after the construction is completed. To have an exact estimate of this amount, you can use an home loan EMI calculator online.

Additional Read: Which one is better? Under- Construction or Ready-to-Move-In House

Tax benefits on stamp duty

You can claim the amount paid towards stamp duty and registration charges under section 80C of the ITA. However, the benefit is only available after the possession.

Additionally, if the property you are purchasing has a stamp duty under Rs. 45 lakhs, you can also avail of a tax deduction of up to Rs. 1.5 lakhs for interest paid on loan. This provision is made under section 80 EEA.

Nowadays, several targeted home loan calculators are available to keep you abreast of all the rates and charges involved in a loan. Therefore, you can stay aware of the costs and choose wisely.

Wrapping up

There are various income tax benefits on home loan for under construction property. So, if you’re planning to construct a home, then make sure to check your home loan eligibility and reach out to Tata Capital for a quick loan. We have some of the most competitive interest rates, starting from 8.5%.

Apart from this, you can use our home loan eligibility calculator to enhance your eligibility parameters. Enjoy a quick disbursal and hassle-free documentation process with us and move into your dream home without any delay!

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