Hi dear friend. I must consider it as a good question. Many of us may think that the home loans are only eligible for tax exemption and the land loans are not such but the idea is wrong. If the loan is taken only for purchasing land, there shall be no exemption but in case it completes a construction taking a further loan, the entire amounts of both the loans will be considered as exemptable under section 80C and 24 for repayment of principal and interest amount respectively. Let me add some more.
You can get the tax benefits only after the completion of the house construction. The period when the construction is happening, you are not eligible to claim the tax benefits.
During Construction
, if you make repayment of the principal amount, the same can not be claimed for the tax deduction. Only the interest paid can be claimed for such.
If you pay the interest during the construction phase, you can claim the tax benefits in five consequent years of equal installments.
For example if you get the land loan of Rs.4,00,000/- and later get loan of Rs.9,00,000/- for constructing the house, you will be eligible to claim the tax benefits on interest paid for the entire amount Rs.13,00,000/-. But the tax deduction can be claimed only after the completion of the construction.
