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Tax implication on 100% loan disbursement for an under-construction property

Tax implication on 100% loan disbursement for an under-construction property is not available

Apnaloan.com Research Bureau

10 Aug 2007

An underconstruction property was bought in August 2004 with disbursement being made in stages, till final disbursement. If we make 100% disbursements to the builder right at the beginning and start paying EMI (rather than pre-EMI) to the bank from August 2004 onwards itself, how can we claim tax deduction benefits?

It does not make any difference to the answer, whether the interest is payable as a Pre-EMI interest or as interest portion of an EMI payment. As mentioned above, the deduction in respect of the capital portion of the loan repaid during the years in which construction is still not complete- is lost forever. Hence, no deduction is available for and unto year ended on March 31, 2006.

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