Home Loan Tax Benefits If You Own Multiple Homes

1. Home Loan Tax Benefits If You Own Multiple Homes As we all know that many people migrate from their home towns to different locations in search of employment and other facilities, and for their residential purpose they can buy another house. Besides that, many people nowadays are purchasing apartments for their parents or children, to provide them a comfortable life. Some people also buy another house for investment purposes. In our law there is no restriction for a person to buy multiple homes. Likewise, under either tax laws or banking laws, there is no limit on the number of houses for which you can take home loan tax benefits. However, with all properties taken together, the amount of home loan available to you will depend on different factors such as your salary, age, and your ability to repay the loan. With regards to the interest charged on money lent, you are entitled to some tax advantages for the purchase, building, reconstruction, or maintenance of house property. Regarding the recovery of the principal cost for the purchase and

2. development of a residential home, tax laws may authorize you to assert home loan tax benefits. Home Loan Tax benefits for payment of interest: Under Section 24(b), you can demand a deduction for interest due on a loan taken for the purchase, building, maintenance, or renovation of any house, whether commercial or residential. This interest-payment exclusion is valid on any residential or commercial property that you own. If the money is lent from a bank/housing firm or your friends and family, it is still available. The interest deduction can only be asserted in respect of the year of which the possession was taken. Therefore, the interest charged during the contract phase for the building under construction cannot be asserted until the completion of the construction. It can be amortized and stated in five equivalent instalments starting with the year in which the building is finished and the house is taken into possession. •The income tax laws authorize you to have two self-occupied residential properties. So, if you own and occupy up to two properties, the cumulative interest expense deduction for both properties taken together is confined to Rs 2 lakhs per annum. •If you own more than two properties, you have the option of choosing as self-occupied for any two houses, and the remaining houses are considered to have been let out to enable interest on lent capital. •The deduction is reduced to Rs 30,000 if the money is lent for the construction of a house that is meant for self-occupation and if the building has not been done within the stated duration of five years and the loan has been lent after April 1, 1999. •You are entitled to claim the entire interest paid towards the rent earned, without any upper limit, for renting out property owned by you. Therefore, if any asset is regarded as presumed to have been let out as mentioned above, you will claim the full interest charged for those assets. Please notice that under this clause, you can not only assert the interest but also the transaction charge, as well as all other costs, such as prepayment costs. Concerning such extra houses that are used for self-occupation, even though you have not earned any rental, you have to bid notional market rent as income from such houses. Before 2019, taxpayers were allowed to have only one self-occupied house, but some people who own and reside in a house in their current city of

3. residence and another one in indigenous areas, either self-acquired or inherited, were relieved by the modification of the Finance Act 2019. While you are entitled to claim Rs 2 lakhs for your self-occupied home, as well as maximum interest for leased out or deemed rented out assets, there is a cap of Rs 2 lakhs on the amount of total loss under the head ‘Income from house property’ that you may set off against your other profits. Any deficit left unadjusted will be taken forward and, for eight following years, be paid off against revenue from the same side. Home Loan Tax benefits on principal repayment: Under some scenarios, tax laws not only enable you to deduct interest but also allow you to rebate the principal balance for redemption. A person and a HUF can demand up to Rs 1.5 lakhs for repayment of the principal of home loan taken from prescribed institutions for residential home property, as provided for in Section 80C. With other eligible services, such as provident fund payment, life insurance premium, tuition fees, PPF payment, NSC, ELSS, etc., this deduction is available. This exclusion is also valid on any fee spent on residential house registration and stamp duty. There is no limit in the income tax laws on the number of houses on which you can claim this deduction. For this reason, the income tax laws often do not differentiate between self-occupied land or let-out land. Therefore, while you can take home loans for more than one asset, the cumulative value of the deduction is limited to Rs 1.5 lakhs for repayment of the principal sum of all the home loans taken together. Only after you have taken ownership of the property will this deduction be asserted as well. When you have begun to repay the balance of a home loan before taking custody, you will not receive any tax incentives, either now or in the future, on such a payment. Please note that credit repayments provided by your friends and family are not available for this deduction. If a residential house is sold or moved within five years of the end of the year in which the home loan was obtained, no deduction shall be given in respect of the year of the sale. Besides, the exemptions stated in prior years are repealed and are charged in terms of the year of the move. However, no such clause exists for the reversal of tax advantages given the interest paid on the sale or lease of a house under Section 24(b). Similarly, if you repay the debt within five years, there is no mechanism to undo the charge. For any other query about real estate, please see other blogs of SBP Group.