Benefits on Buying a Second House

A second house can be helpful in reducing your tax burden, as , you can avail higher deduction as there is no limit on the interest paid on second house. The tax liability can be reduced in if the person avails on the deduction on home loans, it become more beneficial in case of second house.

• The borrower can have the tax benefits if he is borrowing another loan for second house
  simultaneously with the first loan. But in this case, only interest amount will be eligible for deduction
  as the principal amount does not come under this benefit.

• The benefits will become null if the second property is a commercial property.

• The tax benefits are associated with payment and not with the time limit for which the payment is
   being made.

• If the second property is sold before 5 years of the purchase of the property, the tax benefits
   under section 80C will also be reversed.

• If the property is rented out or self-occupied than the benefits under 80C will remain

• For e.g. if a person is borrowing Rs. 30 Lacs as a loan amount, then, on the first house he can
  saves up to Rs. 1 Lac on the principle amount (Under Sec 80C). A maximum saving of Rs.1.5 Lacs
  can    be made upon Interest amount (Under Sec 24). However, in the case of second house he will
  not be making any saving on the principle repaid but there is no limit for saving made on the
  interest paid (Rs. 2.72 Lakhs in this case). Here the loan tenure is assumed to be 20 years for each
  loan and the interest is assumed to be at 13% P.A. calculated at annual reducing balance method.

• The Income Tax Department considers that the second house has a rental value even if its lying
  unused. Additionally, the notional or deemed income will be added to the taxable income.

┬ęCopyright 2013. Best Loan Dealz. All Rights Reserved. Unit of Gurukul The Foundation