I have one house in which i live. If I take loan for a second home and rent it out what will be the taxation aspect?
There are a ton of tax benefits available even on your second home. This will include the interest payment benefits that you are claiming for your first home. As you might know, interest deduction is capped at Rs. 2,00,000 for a self-occupied property. This goes for your second home even if it is let out or remains vacant (deemed to be let out). The limit is Rs. 2 lakh.
The maximum limit for principal repayment tax deduction is capped at Rs. 1.5 lakh. You will be exempt from paying wealth tax (for having more than one property in your name) if the second house is let out. However, you need to let it out for a minimum of 300 days in a year.
Is there any way you can gain more? Of course there is! To make this even more advantageous, you should treat the property with higher annual value as self-occupied. This way, your taxes get reduced.
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