IT benefits on Home Loan with multiple properties

VeeJay 1
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Hi,

I would like to know what income tax benefits I can claim in the following scenario:

a. I have a vacant plot in my name

b. I have another plot on which I have recently constructed a new house - initially composite loan was taken for purchasing the plot and was later topped up for house construction. So currently the total oustanding amount is 50 Lacs

c. I stay in a rented house, for which I am claiming HRA benefit. Since my new house is far from my workplace I plan to rent it out and continue staying in the same rented place.

My questions are:

  1. Can I continue claiming HRA benefits since I am paying rent?

  2. For my new home can I claim relief for the interest paid on the loan after declaring the rent received as income? Is there a ceiling for this relief (Since this is my second property) ?

  3. Am I eligible to claim relief only for the house part of the loan, or for the full loan amount (i.e plot and house) ?

Thanks in Anticipation!

second-home-loan hra-exemption home-loan-interest house-rent-allowance
1 Answers
  1. Yes, you can continue with HRA exemption as you are staying on rent for work.
  2. There is no maximum limit of interest deduction on your not self occupied house. All you have to do is show rental income as income from house property.
  3. You are eligible to claim relief for full loan (plot and house), as both are taken for constructing house.
Pankaj Batra5212

Thanks Pankaj, for point #2 in your answer - will the interest deduction be capped to amount of rent received from that house? Note: I am gainfully employed and hence have taxable income upto 10 Lacs per annum.

VeeJay•

No, interest won't be capped. Say, e.g. your rental income is 2 Lakhs and interest paid is 3 lakhs. Then net income from house property would be -1.6 lakhs (after 30% standard deduction deducted from rental income)

Pankaj Batra•

Ok, so does this mean that 1.6L can be reduced from my taxable income of 10L from employment (plus any other incomes)? Thanks in advance!

VeeJay•
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