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• Got a question for Harsh Roongta? Please write to us.

I booked a flat, the possession of which is in June 2006.

However, since the builder had an ADF, I paid the entire loan. Hence, my Equated Monthly Installment has begun.

Will I get a rebate on the total amount of interest and principal paid in the current financial year 2005-06?

- Manish Agarwal

ADF

For those who are unaware, let me explain what ADF is.

If the house is still under construction, only a partial disbursement of finance is made by the home loan company. This is done periodically and the final disbursement is made on completion of construction.

However, in some cases, the home loan company may be willing to make the entire payment even if the construction is not complete.

This is known as the Advance Disbursement Facility.

An advance disbursement is generally made if the buyer requests the home loan company to do so and if the home loan company is fairly convinced the builder will complete the construction on time.

To understand various types of disbursement read, 10 home loan terms you must know.

Tax benefits

No tax benefits are available in respect of repayment of a home loan in the year in which the construction of the property is not completed.

The tax benefits will therefore be available for the first time only in respect of that year.

Interest payment

In that year and the four subsequent years, the interest payable till March 31, 2006 will be aggregated and 1/5^th of this amount, along with the interest payable for that year, will be allowed as a deduction under Section 24.

You will be eligible for deduction for the entire interest payable from April 1, 2006 to March 31, 2007, plus 1/5th of the interest payable from the date of disbursement till March 31, 2006.

Principal payment 

No tax benefits are available in respect of the principal portion of the loan repaid till March 31, 2006 as the construction will not be completed.

The deduction for the principal amount repaid will begin from the financial year ending March 31, 2007. No tax benefit is available for the principal repaid before March 31, 2006, and this benefit is lost forever.

• Can I take a home loan from my family

I booked a flat for which stamp duty and registration were done in October 2004.

Possession will be in December 2005.

Can I claim tax benefit on stamp duty  and registration in this financial year (2005-2006)?

- Vijay Mohite

No.

You will not get any tax benefits in respect of stamp duty and registration charges paid in a year in which the construction of the property was not complete.

• 10 questions on joint home loans answered

I took a home loan in November 2003.

At that time, I was told that the registry for the flat could be done within three years of possession.

Now the bank is forcing the builder not to give me possession until I get the registry is done. In the agreement with bank or builder, there is no mention regarding requirement of registry before possession.

Is the bank justified here?

- Ravi Kant

Registration of your agreement with the builder primarily safeguards your very own interest.

My advice to you is to get the agreement stamped and registered as early as possible.

Got a question for Harsh Roongta? Please write to us!

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