So far we know that one can claim IT rebate for principle payment and for interest component upto 1.5 Lakh. However tax treatment is different when one is taking a loan for property under construction like a villa being made by a builder. In such cases partial loans are disbursed by the bank and for that one can only take the rebate under sec 24 (b) where some part of the loan is disbursed by the bank during construction stage of the property, the tax treatment is slightly different. This portion of the interest paid prior to completion of construction of property cannot be claimed as a deduction in the year in which it is paid. However, upon completion of construction, the assessee can claim deduction for this interest under Section 24(b) in 5 equal installments, i.e., 1/5th for each of the five years after the end of construction period.
Thus one will only get tax rebate only at a later stage and same may be considered while applying for loan where saving tax is primarily on the mind.
Click Here to Subscribe for Free Tips in Email
