• Income Tax Benefits on Second Property which in under construction

Hi, I have bought a second house which is under construction and am wanting to apply for Home loan on the same . What are the tax benefits that i can claim assuming iam paying full EMI to the bank . Will i be able to claim both Principle & Interest deductions ? Please advise ....
Asked 2 years ago in Income Tax

Hi,

- You can claim deduction of interest and principal in the year of completion of construction and not during construction.

Thanks

Vivek Kumar Arora
CA, Delhi
4063 Answers
338 Consultations

5.0 on 5.0

On second house before completion certificate and possession no income tax benefit is available,

After completion certificate and possession from if you let out either one property then normal benefits available as you are currently taken but if you don’t let out other property the also either one property is considered as deemed let out and you have to pay tax on the same accordingly

Lalit Bansal
CA, Delhi
739 Answers
53 Consultations

5.0 on 5.0

Since you are buying second house I am assuming both are self occupied however you will have to show one house as self occupied and one as deemed let out by considering municipal rate as deemed rent.

You will be able to claim deduction of both interest and principal, but interest u/s 24 maximum upto 200000 and principal u/s 80C maximum upto 150000.

Hope you find it helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
3791 Answers
45 Consultations

5.0 on 5.0

Hi,

You will need to declare one of the house as self occupied and one as deemed let out and declare rental on the same.

You can claim deduction of both interest and principal.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

The deduction for interest on home loan is allowed for one self occupied property only. Hence, interest paid on your second property cannot be claimed as deduction.

However, the repayment of principal may be claimed u/s 80C. However, as you might be aware, the total deduction allowable u/s 80C is Rs.1.5 lacs only.

Deepesh Jhawar
CA, Kolkata
9 Answers

5.0 on 5.0

Dear Sir,

Hope you are doing well !

You can claim income tax exemption on interest payments of up to Rs 2 lakh per year under section 24 (no limit for let out property i.e.you can claim full interest) and another Rs 1.5 lakh per year under Section 80 C towards the principal repayment for a Self-occupied property.

However, you cannot seek these tax benefits in the pre-construction phase (i.e. no tax deductions available for an under construction house), even if you have started repaying the housing loan through EMIs.

The interest for the pre-construction period can be availed for deduction in five equal installments from the year the construction is complete.

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
5077 Answers
152 Consultations

5.0 on 5.0

Hi , you can take interest benefit under house property head and deduction for principal u/s 80C.

However, these deductions can be claimed once you take the possession of the property.

Interest paid during pre Construction period will be allowed in five installments starting from the year of completion of the property.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Dear Sir,

Yes, you will be able to claim the both deductions.

Interest- under section 24 up to Rs. 2 lakh for self occupied property. No limit for let out property.

Principle -under section 80C up to Rs. 1.5 lakh.

Karishma Chhajer
CA, Jodhpur
2387 Answers
20 Consultations

5.0 on 5.0

Hi

For under-construction properties, no deduction is provided for principal repayments until the construction is completed.

The deduction for interest payments till the year of completion shall be provided in 5 equal installments starting from the year of completion.

Lakshita Bhandari
CA, Mumbai
5460 Answers
539 Consultations

5.0 on 5.0

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