We plan to buy a second home on loan. I have already paid off the loan on my first house. Will I be eligible for tax benefit on my second home loan?
-Bhaswati Banerjee
Yes, you will be eligible for tax deduction on both, the principal repayment as well as the interest component of your EMI. Whether or not you had taken home loans in the past does not matter and you can still claim deduction upto the stated limits.
Under Section 80C of the Income Tax Act you can claim the amount of principal repaid, along with certain other types of investments and expenses, within the overall limit of Rs 1.5 lakh per year.
The interest amount can be claimed under Section 24(b) of Income Tax Act. In case of a self-occupied property, you can avail tax exemption on interest of upto Rs 2 lakh in a year. In case of other properties, there is no upper limit and the interest component can be claimed.
This may not be relevant for you but an additional Rs 50,000 deduction is allowed to first time home buyers under Section 80EE.
This article was originally published on February 01, 2017.
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