How To Claim Tax Exemptions On Multiple Home Loans?

By Jay Dee Infra In Tax Benefit No comments

How To Claim Tax Exemptions On Multiple Home Loans?

There is no restriction on the number of home loans that a homebuyer can take like there is no restriction on the number of homes that one can buy.

According to popular notion, one cannot take more than one home loan at a time but it is not so. A homebuyer can also claim the necessary tax benefits on multiple home loans.

However, for all the properties taken together, your ability to pay back the loan as well as the earning will determine the amount of home loan that you are eligible for.

Tax benefit for payment of interest

Under Section 24B of the Income Tax (I-T) Act, you can claim deduction for interest payable on a loan, repair, renovation or construction. But, if you own only one house which is self-occupied, the upper limit of deduction on interest payment is restricted to Rs 2 lakh per annum.

Yet, if the construction has not been completed within the stipulated period of five years and the loan has been borrowed after April 1, 1999, the deduction is restricted to Rs 30,000.

In case the owned property or properties is/are let out on rent, deduction can be claimed for the entire period of interest without any upper limit against the rent amount received for each of the properties.

What is even poignant to note is that if there are more than one property occupied by you, it has to be noted as a let-out for which a notional rental income is to be paid as part of taxation which is equal to the amount that the property is expected to get.

Tax benefits for the full interest paid can be claimed for money borrowed once a property is considered a let-out property.

For any commercial or residential property, this deduction on interest payment is available. Irrespective of the source of loan (whether from a housing company or a bank or from friends or family) for the purpose of reconstruction, renovation or repairs, this deduction on interest is available.

Any amount of interest paid during the construction of a house can be claimed in five instalments of equal value, from the year the construction begins until the time when the possession of the house is given to the homebuyer.

tax exemptions on multiple home loans

Tax benefit on principal repayment

Up to Rs 1.5 lakh can be claimed for principal repayment of home loan under Section 80C of the Income Tax Act, 1961, including stamp duty charges and cost of registration.

Though home loans can be taken for various properties, the amount of deduction should be only restricted to Rs 1.5 lakh. PPF (public provident fund) contribution, life insurance premium, tuition fees, PF contribution and other such amounts are included in the deduction amount.

However, the deduction can be claimed only after possession of the house is complete. If the principal amount repayment has already started before possession of the house, the benefit is not available.

An important point to note is that loans from family and friends cannot be considered for this deduction.

Source: Makaan