How to claim tax benefit on the second house?

I am 41 years married and reside in Dharwad. I took a home loan in 2011 to buy a house. I have repaid this home loan. Now, I want to take another home loan to buy a house. Will I still get tax exemptions as this is my second house?

Asked by : Sandesh - Dharwad | 308 Views

You can avail tax benefits in respect of the interest paid on the home loan availed for the second residential property and the quantum of interest that qualifies for the tax deduction would vary depending on whether the second residential property is let out or self-occupied. You can claim a tax deduction towards repayment of principal in respect of the housing loan borrowed from specified lenders, subject to overall cap of Rs 1.5 lakh, under Section 80C. If the property is self-occupied, the deduction towards interest on the home loan is capped to Rs 2 lakh per financial year. Where the property is let out or is required to be treated as ‘deemed’ to be let out, the interest paid on the home loan can be fully claimed as deduction against the net rental value or deemed rental value offered to tax. You need to remember this. Beginning financial year 2017 -18, the loss arising from all house properties owned (whether self-occupied or let-out or deemed let-out) that can be set-off against income from other heads of income in the same financial year is capped at Rs 2 lakh. The remainder of the loss that cannot be set-off against income in the same fiscal is then required to be carried forward to future years (up to eight financial years) to be set off against taxable income from house property in such fiscals.