Unlocking delayed tax benefits
If you paid interest on a home loan while your house was being built, you could not claim it right away. After possession, the Old Regime lets you recover it as pre-construction interest under Section 24b — spread across five years.
The rule in one line
Pre-construction interest is deducted in 5 equal annual instalments from the year of possession (Source: Section 24(b) Explanation, Income Tax Act).
Step 1: define the pre-construction period
It starts on the date you took the loan and ends on 31 March of the financial year just before the year of completion.
Example: loan taken July 2023, possession October 2025 (FY 2025-26). The pre-construction period is July 2023 to 31 March 2025. Interest from April 2025 onward is regular current-year interest.
Step 2: total the interest
Add up all interest paid in that period. Say it is ₹3,00,000.
Step 3: divide by 5
₹3,00,000 / 5 = ₹60,000 per year.
Step 4: claim it
From the possession year (FY 2025-26), add ₹60,000 to your regular current-year interest.
| Component | Amount |
|---|---|
| Current-year interest | ₹1,50,000 |
| Pre-construction instalment (1/5) | ₹60,000 |
| Total before cap | ₹2,10,000 |
Note: if self-occupied, the total claim caps at ₹2,00,000; if let out, there is no cap.
What you should do
- Pin down the exact loan date and completion date — they define the period.
- Sum interest only up to 31 March before the completion year.
- Claim one-fifth each year for five years, watching the ₹2 lakh cap.
Common mistake
Miscounting the cut-off dates and including post-possession interest in the pre-construction pool, or vice versa. The two buckets must not overlap.
How LastMinute ITR helps
Getting the cut-off right by hand is error-prone. LastMinute ITR takes your loan start and possession dates and runs the 5-instalment maths, placing the figure in your deductions and comparing regimes. You file and e-verify on incometax.gov.in.