Income tax rules on pre-EMI refund on home loan if property is sold before 5 years

Question: I took out a home loan for an apartment and paid pre-EMI as well as EMI. I am claiming the pre-EMI refund for 3 years (total pre-EMI interest divided equally over 5 years) as well as a deduction under Section 24(b) and 80C with respect to EMIs paid. Now I sold the apartment in the current year and repaid the entire loan amount. I would like to know if I can apply for the pre-EMI refund for the next two years remaining after the sale of the apartment?

Answer: Since you have already sold the house for which you were entitled to claim interest before EMI for the next two years, since no income is taxable in respect of the same ownership of the house under the income from the property of the house, your right to claim the proportionate pre-EMI interest for the remaining period is lost forever and you cannot claim it even against any other property of the house. However, you will be able to claim proportional interest linked to the current year as there is no provision to reduce the claim based on how long the property is held during the year. if indeed your right to claim pre EMI interest for one year is lost.

Since the home is sold within five years of the end of the fiscal year in which possession of the home was obtained, any repayments claimed by you in the past three years for repayment of the principal amount of the home loan under section 80C will have to be reversed and added to income for the current year.

In addition, no Section 80C deduction is available in the current year with respect to the principal amount of the home loan repaid in the year.

Please note that there is no similar provision for the reversal of interest benefits claimed under Section 24(b) in the past in the event that one sells the house within five years. after taking possession. In addition, you would be entitled to claim the deduction in respect of interest paid during the year, including pre-EMI interest under Section 24(b).

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