It is calculated on accrual basis
If loan was for construction/acquisition, borrowed after 1999 and completed in 5 years of taking loan, then interest upto 2 lacs a year
IF loan for repair/renovation, then interest upto 30k a year
But Interest allowed deduction under Old Regime only.
Interest story 3: Suppose you took a loan for purchase /construction of property. But property was acquired after a few years. So you don’t own any property when you incur interest. How do you get deduction in such a case. The answer is yes, it is allowed from the year of acquisition. Interest is allowed as deduction in 5 instalments (1/5th each) for such period of pre-acquisition, starting the year you own the property. But again its if you follow the Old Regime or Old Way of Taxation.