Home loan tax concessions are available only after house is constructed and possession taken. If house is sold while under construction, no tax benefit available. Conversely, if home loan closed anytime earlier but possession still taken, benefits are available for interest paid.
Interest: No deductions for EMIs or Pre-EMIs for interest till the construction is completed. Say construction completed during financial year (FY) 2018-19. Then all interest paid till 31 March 2018 is totaled and can be claimed in equal installments over 5 years from FY 2018-19 onwards along with that year’s interest, subject to a total limit of Rs 2 Lakhs per year. Balance is carried forward for next 7 consecutive years. However, if construction period was longer than 5 years from end of the FY in which loan was first taken, limit of Rs 2 Lakhs gets reduced to Rs 30,000 per year only.
Principal: Counted as part of Section 80C.