Income Tax Benefits/Deduction Applicable on Second Home Loan

By | April 27, 2022

Information on Income Tax Benefits / Deduction Applicable on Second Home Loan

From FY 19-20 onward within the Finance Act, 2019, the government has allowed a serious relief u/s 23 and 24 of the Income-tax Act, 1961 by permitting the taxpayers to declare in their legal instrument the worth of their ‘Two’ homes as self –occupied, on a 0 basis. That means, currently someone will get pleasure from the advantage of “NO TAX” in respect of his 2 owned house properties. currently allow us to perceive the impact and its advantages that we will claim if we’ve got obtained any loan for the acquisition/construction of the second house property:

Under the Section 24 of the tax Act, 1961, vide Finance Act, 2019, a new amendment has been incorporated “the aggregate of the quantity of deduction” thus on embodying the payment of interest created by someone w.r.t his/her owned house properties.

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Allow us to perceive the higher than amended section 24 of the tax Act, 1961 through the below-mentioned table:

On the Borrowed Capital, the Maximum Deductions on InterestIn case of let out House PropertyActual interest paid shall be allowed as a deduction subject to the depart limit of max. Rs. two lacs and balance loss shall be carried forward.
 For self-occupied house property in case of capital borrowed for an “Acquisition or construction” of a house propertyMaximum deduction of Rs, 2 lacs is allowable. However, in respect of a newly constructed house, its construction ought to be completed at intervals 5 years from completion of the FY during which capital was borrowed.
 For self-occupied house property in respect of capital borrowed for “Reconstruction, repairs or renewals” of house property or either its construction not completed within an interval of 5 years from the end of the FY within which capital was borrowedRs. 30,000 will be the maximum allowable deduction

Note: Any interest referring to the amount before the year of acquisition/ construction of the house property shall be allowed as a deduction in 5 equal installments, starting with the year within which the property was acquired/ made.

 Except the on top of mentioned interest profit deduction; extra edges are there for a loan taken by a borrower for his /her house property. Let us conjointly perceive an equivalent although a table given herewith below:

SelectionDeduction TypeLimits and Conditions
Section 80CFor a residential house as a property the principal loan amount takenWith a lock-in period of 5 years maximum 1,50,000 on payment basis
Section 80EEFor a residential house as a property repayment of interest loan takenMaximum Rs, 50,000/- in case of following given condition- a) Loan sanctioned amount is between 01.04.2016 to 31.03.2017  b) Quantity of loan doesn’t exceed Rs. 35  lacs  c) Worth of a house property doesn’t exceed Rs. 50 lacs  d) Assesse doesn’t own any residential house property on the date of sanction of loan.
Section 80EEAInterest repayment of loan taken in case of residential house propertyMaximum Rs, 1,50,000/- followed by a given condition- a) Loan sanctioned timeframe is between 01.04.2019 to 31.03.2021     b) Taxation price of a house property doesn’t exceed Rs. 45 lacs  c) Assessee doesn’t own any residential house property on the loan sanction date    

Note: The above-mentioned tax deductions are per person and not per property. Thus just in case of joint possession of house properties, everybody repaying the number would be eligible to assert the whole deduction on an individual basis subject to the particular payment incurred with respect to interest and Principal.

Note: For claiming the above-given tax deductions, an interest certificate with the correct bifurcation of the Principal and Interest paid within the fiscal year are going to be needed at the side of the loan sanction letter.

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