India, Feb. 5 -- Ahmedabad-based Kushal Sharma took a Rs.50 lakh home loan for an under-construction, self-occupied property and paid Rs.1.5 lakh in interest before taking possession. Budget 2026 has clarified that such prior-period (pre-construction) interest can be claimed in five equal instalments after the completion of construction. However, the total annual deduction for home-loan interest on a self-occupied property, including pre-construction interest, remains capped at Rs.2 lakh. This means that while Sharma can spread the tax benefit over multiple years, the overall deduction will stay within the prescribed limit.

The clarification in Budget 2026 brings much-needed certainty for homebuyers who have taken loans for under-constru...