Can I Claim Pre EMI Interest?

Hi, Buddy

Are you perplexed and questioning yourself that can I claim pre EMI interest on housing loan? Let me assist you with this. When you take out a loan to obtain financial help, typically to purchase an asset, the loan principal and interest are paid back in EMIs. 

EMI stands for equated monthly instalments, and it is a loan that must be returned over a set period of time. If you have a home loan, for example, you will be making a monthly payment to the bank.

When taking out a home loan, Pre-EMI is important because the building is still under construction. The builder's payment for an apartment under construction is somewhat dependent on the stages of construction. The length of time it takes to complete a building relies on the speed with which the builder works, which is in turn dependent on a number of factors.

The entire cost for the apartment/building is not paid to the builder for these reasons. The payment is made in instalments and is tied to the different stages of construction.

As previously stated, loan repayment (EMI) begins only after the builder has received the entire loan money. 

Despite this, the builder must pay EMIs even when the loan is only partially disbursed — these EMIs are known as Pre-EMIS. Please keep in mind that the interest component (to be paid on pre-EMIs) is the amount of interest that has accrued on the money that has been distributed up to that point.

Taking out a home loan to buy your dream home has never been easier or more reasonable, thanks to the fact that you may deduct the home loan interest rate from your taxes.

Yes, you can deduct interest paid on a home loan before you take possession, but only when the construction is finished and the property is ready to live in. In this scenario, however, you can only claim up to Rs. 2,00,000 in compensation.

Meanwhile, the interest you pay before you gain possession builds up. You can reclaim this cash in five instalments when the construction is completed if you seek a tax exemption on this interest.

I hope this answer clarified your doubt about the pre EMI interest on housing loan.

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