What is pre construction period?

As a real estate agent, I will share my knowledge here. The term "Pre-Construction Period" refers to the time frame beginning on the date this agreement was signed. It also concludes when the construction process for a project begins. Let me tell you more about the pre construction period term.

What is a pre-construction period?

The time before construction begins is from the day the home loan is approved to the day the building of the house is finished. Whereas your property is currently being built, no interest can be deducted. But, a deduction is permitted beginning with the year that your property's construction is finished. It is for the interest paid during the pre-construction phase, also known as the Pre-construction Interest. Now you know what is pre construction period.

How is pre-construction interest calculated?

• You need to determine the pre-construction phase for a built-up property.

• It is from the year that a mortgage loan is obtained until the year that construction is finished.

• But, from the date the loan was obtained until the last day of March prior to the fiscal year in which work is finished, interest may be charged.

• You can use the interest certificate the bank supplied to figure out the interest that was paid during the pre-construction period.

• An annual house loan certificate is issued by the loan company each year. It includes information on the total EMI paid as well as interest and balance repayment.

What are the requirements to claim the interest?

The following requirements must be met in order to claim interest paid on a home loan up to Rs. 1,50,000:

• The home loan has been approved for the time frame beginning on April 1 and ending on March 31, 2022.

• The residential house property's stamp duty value is not more than 45 lakh.

• At the time the loan was approved, you as a taxpayer must not possess any residential real estate.

• So, even during the pre-construction phase, if you as an individual taxpayer satisfy the requirements set forth in Section 80EEA of the IT Act. Then you would be qualified to claim the interest deduction.

This is all about the pre construction period.