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buying houses. Then there are many who are buying their second homes.
Returns from real estate as an investment avenue is only second to equity.
And to make it more simpler, you have home loans to assist you in buying
your loved property.
Today we will check on what are the income tax benefits on a second
home loan in India. Income tax benefits of second home ownership is often
confusing and I hope this article will clarify on the basics.
Example
Suppose a person has two houses with the below details. He is paying
interest of Rs 80,000 and Rs 125,000 on them during one financial year. The
annual value of the houses has been arrived at already and shown below.
Now the question is, which house should the investor self occupy and which
one should he let out to avail of maximum income tax benefits. Note that the
principal component of tax savings has not been considered here as even if
the home loan principal contribution does not add up to Rs 1 lakh, the other
Section 80C deductions more than make up for it. So the interest component
of the home loan is only considered here.