The waiting game for tax benefits
Buying an under-construction home means you start paying EMIs (or pre-EMIs, where you pay only interest) long before you get the keys. Can you claim tax deductions while it is still being built?
No. You cannot claim home loan deductions until you have possession. Under the Old Regime, both Section 24b (interest) and the 80C basket (principal) need the house to be complete and in your hands.
The number to remember
Pre-construction interest is claimed in 5 equal annual instalments after possession, within the ₹2 lakh self-occupied cap (Source: Section 24(b), Income Tax Act).
| Phase | Interest treatment |
|---|---|
| During construction | Accumulated, not claimable yet |
| After possession | 1/5th per year for 5 years |
What happens to what you pay
- Principal before possession: a lost benefit — you cannot claim it now or carry it forward.
- Interest before possession (pre-EMI): not lost. It is "pre-construction interest", just delayed.
The 5-instalment rule
Once you receive the possession certificate, add up all interest paid during construction and claim it in 5 equal yearly instalments, starting the year construction completed. Each instalment is added to your regular current-year interest, and the total still respects the ₹2 lakh self-occupied cap.
What you should do
- Keep every annual interest certificate from the construction years — you will need them all later.
- Note the financial year of possession; that is when the 5-year clock starts.
- Do not try to claim principal paid before possession — it does not qualify.
Common mistake
Claiming interest during construction. It feels unfair, but current-year claims before possession are disallowed and can trigger a defective-return notice.
How LastMinute ITR helps
The 5-instalment maths is easy to get wrong. LastMinute ITR calculates it from your loan and possession dates, places the figure in your home loan deductions, and compares old vs new regime, since these benefits need the old regime. You file and e-verify on incometax.gov.in.