Tax Benefit on second home loan

POSTED BY presenan pillai ON February 27, 2013 4:52 pm COMMENTS (7)

I was having a home loan which i closed on last financial year (2011-12). Currently I stay in the house which i had constructed using this home loan. Since the rate of interest was hiked above 12%, i thought it is not wise to have this loan any more and i prepaid the entire loan amount and closed it.

Now i am planning to buy a new site and construct a new house in that by taking a second home loan. I am aware that if there are two home loans, i get tax benefit for the entire interest i pay for the second home loan. In my case, do you think if i go for the second home loan, i can claim tax benefit for full interest paid as i do not have two housing loans running at the same time.

Or When i closed my first housing loan, and go for a second home loan, am i eligible to get interest benefit out of my second home loan.

7 replies on this article “Tax Benefit on second home loan”

  1. presenan pillai says:

    Thank you Ashal

  2. Dear Presenan, 2nd home loan is nothing to do with your old home loan. it’s dependent only one thing that the house in question is self occupied or on rent & earning income to you. For the given situation, if you keep living in old house & give the new one on rent, the rental income ‘ll be added but full interest ‘ll be available for tax benefit.

    Thanks

    Ashal

  3. Credexpert says:

    Dear Mr. Pillai,

    If you plan to self occupy the house which you propose to take a loan for, then as rightly said by Ashal the maximum interest you could claim would be Rs. 1.5 lacs and the rental income from old house will be taxable.

    But if you plan to rent the house which you propose to take home loan for then, in that case you can claim a deduction on the complete interest paid.

    Regards,
    Credexpert

  4. presenan pillai says:

    Thank you Ashal.

    I trying to understand the possibility that i can save tax.

    How about if i stay in my old house and let out the second house on rent ? in this case can i claim the maximum interest for the second home.

    Just want to remind you in my case i had already closed my first loan. Do i need to have both the loan active to get maximum interest benefit on second loan.

  5. Dear presenan, as you ‘ll live yourself in the new house, it ‘ll be a self occupied property & accordingly the maximum interest you can claim ‘ll be only 1.5L RS. The rental Income from old house ‘ll be added into your income & you w’d have to pay tax on it.

    Thanks

    Ashal

  6. presenan pillai says:

    Thank you Ashal.

    i will move to the second home wich is in the same road and will rent out the first house.

    My question is when i had already closed my first loan, will i get tax benefit on total interest paid on second house. OR do i need to have both the loans active to get tax benefit on interest paid on second home loan.

  7. Dear Presenan Pillai, the 2nd house ‘ll be on rent or self occupied? Please clarify.

    Thanks

    Ashal

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