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People are usually of the opinion that one can easily own any number of properties but can’t take more than one house at a time. However, it is not true at all. There is no limitation on the number of properties that you can own.

As a result, there is also no restriction on the number of houses for which you can grab home finance and enjoy income tax benefits.  

According to RBI loan guidelines, the final loan amount that you can avail for all properties will depend on your earnings and repayment capacity. It will also depend on other home loan eligibility parameters of the lenders as well.

In the context of our discussion, if you hold a second home, then this post will help you know some mortgage tax implications and profits.

Second Home Loan Tax Implication and Benefits

  • If you are holding a second home against your name, only one property will be treated as self-occupied. Its annual income will be taken as Zero. Another home would be taken as ‘deemed rented out’ if not let out. The considerations are for income tax purposes.
  • You are free to select any one home as the self-occupied. It is not a must that the first property should be taken as self-occupied.
  • In case if one home is rented and second home is self-occupied, the actual rental income of the let out property is treated for the income tax computation.
  • If your both properties are rented, then the rental income available from both of them become ready under income tax benefits
  • If there is joint property ownership and if the housing loan is taken on join basis, the rental income gets calculated in respect to the share of the percentage of each co-owner.
  • You are free to hold any number of homes/properties in your name. There are absolutely no restrictions, whatsoever.

Income Tax on Home Loan Principal Element

  • The principal payment for the home loan comes under the deduction under 80C section of the Income Tax Act. The maximum limit for this is up to Rs.1.5 lakh. The exemption rule for principal payment is applicable only on the first property (self-occupied property). For the second property, the home loan principal payment is not permitted for detection under Section 80C.
  • You can also go ahead and enjoy exemption advantage on principal payment if you have let out the home or if it’s vacant. The same condition applies even if you are staying in a different city due to work commitment.
  • All above-mentioned rule of principal exemption is not true. It is inapplicable on under construction home/property.

You are now aware of the mortgage tax implications and benefits on a second home. Being aware of the discussed information will surely help you plan your home buying and save huge on income taxes.

In India, many people in India build or buy a second home for achieving many goals and purposes. It is purchased or built majorly for the purpose of living in them or letting it out on rent and pocketing extra income.

Hence, buying or building a second home or property could be a profitable investment. Nonetheless, before you proceed with your decision, it is a must to go through the discussed mortgage tax benefits that you can grab.

Who does not want to have a home, we all do! If you are a salaried or self-employed professional and willing to have a dream home, you can buy one without issues. The online home loan facility can help you do that along with income tax benefits.  

You can also use the online income tax calculator facility. It will help you get to know your total income tax after all deductions from varied sources at the click of a button.

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