Tax benefit of 2nd housing loan

vanitha 1
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Hi,

I have taken a housing loan in June 2009 for 26,40,000 in Hyderabad and my EMI for the same is 24179/- and my parents and brother are staying in the house. I was staying in Delhi and was claiming relief on both housing loan and HRA from Income tax perspective. The interest and principal component for the same is Rs 198,000/- and 90,000/- per year. I receive a rent of Rs 2000/- from my brother for using the house. Recently I have shifted to Mumbai and I have purchased a flat for with a loan of 36.5 lakhs. The EMI for the same is going to be Rs 36,000/- and would be shifting to this house by the end of this month i.e. April 2012.

kindly let me know the most efficient way of tax saving in this scenario, with respect to using the first housing loan or 2nd housing loan for tax relief.

income-tax-deduction second-home-loan
2 Answers

Hi,

Once you move to Mumbai -I guess first thing is you cannot claim HRA unless the Mumbai house is very far from your office location. Then out of 2 houses - one should be shown as Self-Occupied Property (SOP) & another as 'DLOP' (Deemed Let Out Property) even though your family members only stay in it. Interest paid on home loan is deducted from taxable income. The max is 1.5 lac for a single house. When you have 2 home loans, there is no limit. All the interest you pay is deducted from taxable income, with the below catch. You have to show 'rent earned' on one house as income and deduct it from 'interest sum of 2 loans'. So to get the maximum benefit, show the house which earns less rent as the SOP. It is up to your choice, there is no restriction that you should show the house where you live only as SOP. While computing the 'rent earned'- you can subtract 30% of it as annual maintenance charges and also subtract any taxes paid. The rent cannot be shown very less and just like HRA exemption, there are 3 or 4 calculations (government rate in that area etc etc) and the max of them is taken as 'rent earned'.So you can find all those values and optimize the 'rent earned' section accordingly. Hope this helps.

Phani R221

You can claim tax benefit on both the houses. You can continue showing rent on Delhi house and claim full interest paid.

As Mumbai house would be self occupied, you can claim only up to 1.5 lakh as interest claim. Principal claim would be only be available on self occupied house now.

Pankaj Batra5212
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