have bought a property by taking a home loan. Now I am looking to buy one more property in a hill station to be used as a holiday home. How will my tax deductions pan out?
You can, of course, take a second Home Loan if you are eligible for one. Based on your present income and loans, lenders will decide your eligibility. You can claim tax benefits for both loans. The tax benefits claimed will vary, depending on whether the house for which the loan has been taken is self-occupied or let-out. The principal repayment for both will have a limit of Rs. 1,50,000 under Section 80C of the Income Tax Act. You can claim up to Rs. 2 lakhs each under section 24 for the interest repayment of the loans.
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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