Tax Benefits on Second Home Loan

Owning your own residence is a dream for many but owning a second home is often one of the investment goals of people in India. If you are planning to obtain second Home Loan, here’s what you should know about the income tax benefit on second Home Loan.

In the financial budget for FY 2019-20, the Government made a significant amendment according to which if a taxpayer has two self-occupied houses, then he can declare both of them as self-occupied. And just like you get tax relaxation on the loan taken on the purchase of your first house, you can also be eligible for certain tax exemptions on your second Home Loan.

Read More: Tax Benefits on Home Loans For Financial Year 2022–2023

The applicable Home Loan tax benefit under various sections of the Income Tax Act are as follows:

Section 80C: You can claim 80C deduction on the principal amount up to Rs. 1.5 lakh. Under this section, you can avail the tax benefit on multiple properties, no matter the property is self-occupied or rented out.

Clause 24(b): Under this section, you can claim for interest payments up to a maximum of Rs. 2 lakhs.

For property that is let out or deemed to be let out, there is no limit for interest deduction under section 24b. You can claim full interest paid as a deduction against your rental income.

Note –It may be noted that all the income tax benefits mentioned above are calculated per person and not per property i.e Rs. 1.5 lakhs under section 80C and Rs. 2 lacs under section 24(b) will be the total deduction if both the houses are on loan.

• When you buy a second Home Loan, you should calculate the tax benefits on the second Home Loan using Home Loan tax benefit calculator.

• To claim the tax benefit of Interest and principal paid on second Home Loan, you should ensure that you are the owner of the properties. In case of joint Home Loan, ensure that you are co-owner of the property.

• Yon can claim the deductions at the time of filing your income tax returns, for salaried employees, you can submit your Home Loan Interest Certificate to your employer to adjust your TDS calculation, accordingly.

Key Takeaways:

There are several reasons to invest in a second home. It can be for retirement, vacation, investment, or others. If you are planning to use it for any purpose, you can avail tax benefits on your second home loan.

Now you can avail a Home Loan from AU Small Finance Bank at attractive interest rates and avail tax benefits on home loan under sections 24, 80EE & 80C of Income Tax Act.

Disclaimer - The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.