Tax Benefit on Second Home Loan in India | Indiabulls Home Loans (2024)

FAQs

Can I get tax benefit on second home loan in India? ›

You can claim this deduction on more than one house property. Also, it does not matter if the house properties are self-occupied or rented. To sum up, income tax benefit on second home loan and the first home loan for principal repayment can be up to a maximum Rs 1.5 lakh under section 80C.

Mortgage interest paid on a second residence used personally is deductible as long as the mortgage satisfies the same requirements for deductible interest as on a primary residence.

The amount of tax savings on a home loan depends on factors such as the loan amount, interest rate, and individual tax slab. Generally, borrowers can avail of deductions of up to Rs 2 lakh on the interest paid under Section 24 and up to Rs 1.5 lakh on principal repayments under Section 80C.

Yes, the home loan principal is part of Section 80C of the Income Tax Act. Under this section, an individual is entitled to tax deductions on the amount paid as repayment of the principal component of the housing loan. An amount up to Rs. 1.50 lakh can be claimed as tax deductions under Section 80C.

You can have as many home loans in India as you need, as there is no law barring you from servicing only one home loan at a time. If you want to purchase, say, 5 properties at once, you can take 5 different home loans from 5 different lenders.

Further mortgage to the same mortgagee is possible. Second mortgage to another mortgagee is also legal. If any thing goes wrong, the first mortgagee has to sell the property.

For the IRS to consider a second home a personal residence for the tax year, you need to use the home for more than 14 days or 10% of the days that you rent it out, whichever is greater. So if you rented the house for 40 weeks (280 days), you would need to use the home for more than 28 days.

Buying a second home can be significantly easier and less costly to finance than buying an investment property. Investment properties can offer you tax deductions by claiming operating expenses and ownership.

The Bottom Line

If you qualify for a second mortgage, it can help you pay for home improvements and major renovations, make a down payment on a second home, or pay for your child's college.

According to provisions of income tax act, a person availing home loan can claim exemption of tax both on interest payment as well as principal repayment in his ITR. Yes, if you are paying interest & principal amount towards a loan, you can utilize such amount to reduce your tax liability.

How much home loan interest is exempt from tax in India? ›

Income Tax Act allows home loan borrowers to save on their taxes under two sections, deduction of up to Rs. 1.5 lakh on principal repayment under Section 80C and up to Rs. 2 lakh on interest payment under Section 24(b).

How much interest can I write off? You can deduct the interest you paid on the first $750,000 of your mortgage during the relevant tax year. For married couples filing separately, that limit is $375,000, according to the Internal Revenue Service.

The mortgage interest deduction is a tax incentive for homeowners. This itemized deduction allows homeowners to subtract mortgage interest from their taxable income, lowering the amount of taxes they owe. Homeowners can also claim the deduction on loans for second homes providing that they stay within IRS limits.

A general rule of thumb is the person paying the expense gets to take the deduction. In your situation, each of you can only claim the interest that you actually paid. In order to claim the deduction you must have a legal ownership in the property and a responsibility to pay the mortgage.

Section 54F of the IT Act allows an exemption on capital gain from sale of any property other than a residential house. This exemption is subject to certain conditions which are: Taxpayer should invest the net sales amount of the old property in purchase of a new residential house.

Section 80C is one of the most popular and favorite sections amongst taxpayers as it allows them to reduce taxable income by making tax-saving investments or incurring eligible expenses. Maximum deduction allowed under section 80C?: Up to Rs.150,000 can be claimed as deduction every year from the Gross total income.