Income Tax Benefit on Second Home Loan?

In India, owning a second home can offer various income tax benefits under specific conditions, particularly when it comes to home loans. Here are the key income tax benefit for second home loan:

Interest Deduction under Section 24(b)

For income tax exemption on second home loan can be claimed as a deduction from the total income.

Unlike the self-occupied property where the deduction limit is capped at ₹2 lakh per year, a second home is considered a "deemed let-out property" (DLOP) if it is not actually rented out. For DLOP, the entire interest amount paid on the home loan can be claimed as a deduction without any upper limit.

This can significantly reduce the taxable income, leading to substantial tax savings.

The principal repayment of the second home loan is also eligible for deduction under Section 80C of the Income Tax Act, subject to the overall limit of ₹1.5 lakh per financial year. This limit is shared with other eligible items like PPF, ELSS, and life insurance premiums.

When you own more than one property, only one can be treated as self-occupied, and the other is deemed to be rented out. For the deemed rented property, a notional rent is calculated and added to the owner’s income.

This notional rent is taxable, but the benefit is that the interest deduction under Section 24(b) for the second home loan can be substantial, often offsetting the notional rental income.

Under Section 80C, the stamp duty and registration charges for the second home can also be claimed, subject to the ₹1.5 lakh limit.

To claim these deductions, the home loan must be for the purchase or construction of the house, and the construction must be completed within five years from the end of the financial year in which the loan was taken.

Proper documentation, including loan statements and completion certificates, is crucial for claiming these benefits. Overall, while the income tax benefits on a second home loan in India can be significant, they require careful compliance with tax regulations and diligent financial planning.

This is all about income tax benefit for second home loan.

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Can I Take Two Home Loans

Purchasing a second house is not that tough anymore. The price of the property has come down, the interest rate to get home loans is low, and in most cases, both spouses are working. The banks are also welcoming applicants who are opting for joint home loans.  In this condition, we do tend to wonder about the income tax benefit on second home loan.  I have purchased two houses and I took home loans for both of them. So, I can explain about the tax benefit for 2nd home loan. Income Tax benefit on 2nd home loan According to law there are no rules stating that you cannot own or apply for home loans for more than one house. You can avail of as many home loans as you want and buy houses. But the home loans will be disbursed based on your income salary per month/year. As such there are no restrictions for claiming tax benefits for home loans. You can treat both the properties as self-occupied and receive tax benefit on 2nd home loan up to Rs. 2 lakh for each co-owners in a year. Imagine being able to get a home loan at the lowest interest rate of 6.5%! Well, not a dream but reality! Get home loans at 6.5% from NoBroker and get your home loans disbursed quickly.   Calculate your EMI and get an estimate on your home loans The losses that will arise on account of such interest can be set off against other income to the extent of Rs 2 lakh only. If you are wondering about the second home loan tax benefit calculator, then let me say this, you will have to do the calculations based on various factors. Good news is, as per Section 80C, you can claim the exemption for the principal portion or stamp duty up to a maximum of Rs. 1.5 lakh for each co-owner. I hope you understand now if you can get tax benefit on second home loan. If you want to check whether you are eligible for a housing loan from the partner banks of NoBroker using the NoBroker's Home Loan Eligibility Calculator:

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Read more: What Is Section 24 Of Income Tax Act? How much tax can be saved by home loan? How to calculate depreciation as per income tax act? Can I claim HRA and interest on housing loan? Can you claim HRA for rent paid in another city?