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Personal Finance Queries For The Day (24-12-2018)

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Dr Suresh Surana - 24 December 2018

Harshad, harshadmankar020@gmail.com, Pune: Consider person has taken a first Home Loan and closed it in few years and availed Income Tax benefits on those years. Now, if he plans to buy a second home loan for a second home, can he avail tax benefits on second home loan as well / or is there any dilemma to avail such benefit through taking joint home loan along with spouse?

Yes, you can avail of tax benefit on the second house by claiming it as self-occupied. If an individual is holding more than one property in his/her name, only one property is considered as self-occupied. Its annual income will be considered as NIL. The other property is considered as ‘deemed rented out’ if it is not given on rent. This consideration is for income tax purpose. The notional rent on the second house will be added to your income and will be taxed as per the applicable tax slab. However, you will be allowed to deduct the interest on the home loan from the notional rent. You can select any property as self-occupied. It is not compulsory that first property is only taken as self-occupied. If one house is rented out and the second house is self-occupied, actual rental income of rented house is considered for calculation of income tax. If both houses are rented out respective rental income from both properties is taxable. In the case of joint ownership of property and home loan is taken on joint names, rental income is computed corresponding to the percentage share of each co-owner. Taxes paid to the local authorities, namely municipal taxes shall be allowable as tax deductions in the financial year in which they are paid. Further, 30% of the annual value of the property can be claimed as a standard deduction.

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