Claim tax deduction benefits when the construction is completed

I have booked a flat in September 2002 which is now under final construction phase. The First housing loan installment was drawn in July 2003, and the last installment was in May 2006. The builder is delaying the possession. Please advice up to what date the construction/possession must be accomplished to avail income tax benefit on interest payable against housing loan.

  In the year in which the construction is complete, and the years thereafter-the situation is as under:

If the house is given out on rent, there is no impact of the length of the construction period on the availability of deduction

If the house is self occupied: (i) the limit for deduction of interest payable (calculated as given in column 2 of question no 7 (a) above ) will be Rs. 30,000 if the construction is not completed latest by March 31, 2007 (three years from the end of the financial year in which the loan was first drawn i.e. 3 years from March 31, 2004, since July 2003 falls in the financial year ending on March 31,2004- the date of booking the flat is not material). The upper limit if the construction is completed by March 31, 2007 is Rs. 1, 50,000.

  There is no impact of the construction period on the deduction relating to repayment of the capital portion of the loan.

For more information on Home Loans click here