You may declare curiosity paid for dwelling mortgage absolutely repaid earlier than possession

I took a house mortgage in 2021. I’ll get possession of my flat in 2024 (tentatively). I’m paying common EMI since 2021, inclusive of Principal & Curiosity each, however haven’t been claiming any rebate in my Revenue Tax Return as I’ve but to get possession of the flat. If I repay the complete excellent quantity of my dwelling mortgage now in 2023, can I declare a rebate on curiosity paid until immediately after getting possession in 2024, as I’ll have the house mortgage absolutely paid even earlier than getting possession?  

Below revenue tax legal guidelines, the tax advantages in respect of dwelling loans below Part 24b (for curiosity) and below Part 80C (for principal compensation) can solely be claimed from the 12 months during which the possession of the home is obtained. In respect of curiosity paid for the years previous to the 12 months of possession, the taxpayer can declare 1/5 of the mixture of such curiosity within the subsequent 5 years starting from the 12 months of possession together with the curiosity payable for the present 12 months. Nevertheless, an identical profit isn’t accessible in respect of principal compensation made previous to the 12 months of possession. 

This curiosity may be claimed below Part 24(b) even when the house mortgage is repaid previous to the 12 months of taking possession. There may be nevertheless provision for reversal of tax advantages claimed below part 80C in respect of dwelling mortgage compensation if the residential home is bought inside 5 years from the tip of the 12 months during which the house mortgage is taken. So it is possible for you to to say 1/5 of the curiosity paid previous to the 12 months of possession in 5 years starting from the 12 months of possession. Please observe you will be unable to say any deduction in respect of the principal quantity repaid previous to getting the possession.

Balwant Jain is a tax and funding knowledgeable and may be reached at [email protected] and @jainbalwant on his Twitter deal with.

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Up to date: 22 Jun 2023, 08:04 AM IST