Benefits of Owning Multiple Homes in Terms of Home Loan and Tax Relief
Jun 12, 2018 Home Loan
People are usually not aware of the home loan and tax benefits if they own multiple homes. They are in an impression that they can avail home loan only for one property and not for other. Buyers think that they can avail only one home loan at a time. Also, they are not aware of the tax benefits on interest paid for the home loan of a second home. But these are just myths.
A person can own multiple properties as well as he or she can avail home loan and claim tax benefits for multiple houses. The amount of home loan that one is eligible for depends on an individual’s earning and his or her ability to repay the loan.
Tax benefits: under Section 24B, a person can claim the tax deduction for the interest paid on the loan taken for the purchase, renovation, or construction of any property.
If you own a single property, then the maximum tax deduction that you are eligible for the interest paid is restricted to Rs 2 lakhs per annum. If you have borrowed money after April 1, 1999, and the property hasn’t been constructed within a period of five years from the financial year end in which the money was borrowed, then the deduction is restricted to Rs 30,000 only.
If you have rented out your property or several properties, then you are eligible to claim the deduction for the interest paid. But if you own multiple properties and more than one property is occupied by you, in such case you can choose any one property as self occupied and the other properties can be shown as rented ones and based on that rent. And on any one of such property that has been rented out, you can claim the tax benefits for the interest paid on money borrowed.
If any interest is paid during the period of construction of a property, can be claimed in five equal instalments, from the beginning of the year in which constructed has been completed and the possession of the house has been taken.
Tax benefit on repaying the principal amount: According to the provision of Section 80C, anyone can claim up to Rs 1.5 lakhs per annum for repaying the housing loan taken from certain banks and financial institutions. This also includes the cost of stamp duty and registration fee of a residential property. Even if you take home loans for multiple properties, then also the amount of deduction is restricted to Rs 1.5 lakhs only. The entire amount of deductions includes other items like life insurance, PPF contribution, provident fund contribution, tuition fees, NSC etc.
In this case, the deduction is can be claimed only after you possession of the property. But if you have started paying the principal amount before taking the possession of the property then you cannot avail this benefit. Also, repayments for the loan taken from relatives and friends are not eligible for this deduction.
A person can own multiple properties as well as he or she can avail home loan and claim tax benefits for multiple houses. The amount of home loan that one is eligible for depends on an individual’s earning and his or her ability to repay the loan.
Tax benefits: under Section 24B, a person can claim the tax deduction for the interest paid on the loan taken for the purchase, renovation, or construction of any property.
If you own a single property, then the maximum tax deduction that you are eligible for the interest paid is restricted to Rs 2 lakhs per annum. If you have borrowed money after April 1, 1999, and the property hasn’t been constructed within a period of five years from the financial year end in which the money was borrowed, then the deduction is restricted to Rs 30,000 only.
If you have rented out your property or several properties, then you are eligible to claim the deduction for the interest paid. But if you own multiple properties and more than one property is occupied by you, in such case you can choose any one property as self occupied and the other properties can be shown as rented ones and based on that rent. And on any one of such property that has been rented out, you can claim the tax benefits for the interest paid on money borrowed.
If any interest is paid during the period of construction of a property, can be claimed in five equal instalments, from the beginning of the year in which constructed has been completed and the possession of the house has been taken.
Tax benefit on repaying the principal amount: According to the provision of Section 80C, anyone can claim up to Rs 1.5 lakhs per annum for repaying the housing loan taken from certain banks and financial institutions. This also includes the cost of stamp duty and registration fee of a residential property. Even if you take home loans for multiple properties, then also the amount of deduction is restricted to Rs 1.5 lakhs only. The entire amount of deductions includes other items like life insurance, PPF contribution, provident fund contribution, tuition fees, NSC etc.
In this case, the deduction is can be claimed only after you possession of the property. But if you have started paying the principal amount before taking the possession of the property then you cannot avail this benefit. Also, repayments for the loan taken from relatives and friends are not eligible for this deduction.
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