Second house loan - income tax benefits

Hi,
I am currently residsing in an apartment jointly owned by me and my wife. We both claim tax deduction under 80C for Principle and Interest  proportionately as per our EMI contributions.  Now (May-2016) I have got possession my second flat in a different city which I had purchased in Dec, 2011.  I have paid EMI on my second flat as well right from Dec 2011.   I do not intend to rent out the second flat now.
My question is how best can I claim tax benefit on the EMI I am paying for my second flat.  And how can I claim tax deduction for the interest I have paid from 2011 on my second flat?

thank you,
Asked 7 months ago in Income Tax from Bangalore, Karnataka
Dear Sir,

Whatever deduction you will claim the maximum amount of benefit shall be restricted to Rs. 2,00,000/- for interest component and Rs. 1,50,000/- for Section 80C.

Ideally you should claim for second house and your wife should claim from first house so that you both can avail full limit under both the heads.
Vishrut Rajesh Shah
CA, Ahmedabad
194 Answers
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Dear Sir,

Your second property will be deemed to be let out even if you don't rent it out actually. Further, whatever interest you are paying with respect to that house loan will be eligible for deduction under section 24(b).

Please feel free to revert in case of any queries. We can help you out in filing your ITR taking into account above loan.

Thanks and Regards
CA Abhishek Dugar
Caabhishekdugar@gmail.com
Abhishek Dugar
CA, Mumbai
766 Answers
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Dear sir,

You can get the exemption of interest paid in pre construction period in five equal installments starting from the year in which the construction is completed.

Please let me know if you have any further questions.

Thanks and Regards
CA Abhishek Dugar
Caabhishekdugar@gmail.com
Abhishek Dugar
CA, Mumbai
766 Answers
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Further, I would disagree with my other professional colleague here. There is no limit on the interest which can be claimed with respect to your second house property (I.e. deemed let out property). You can even claim the interest for more than 2 lakhs. 

Hence, it is advisable to claim interest deduction for both the house property.the limit is applicable for your self occupied house property.

Please let me know if you need any further assistance on the above.

Thanks and Regards
CA Abhishek Dugar
Caabhishekdugar@gmail.com

Abhishek Dugar
CA, Mumbai
766 Answers
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For second flat you need to show it under deemed letout and declare Annual rental value and claim total interest you paid as deduction.
Shyam Sunder Modani
CA, Hyderabad
955 Answers
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Dear Sir,

You can select the Flat on which your EMI is on a lower side as a Self Occupied Property as it carries a maximum cap of Rs.200,000/-.

The other flat in which the interest component is higher can be shown as a Let Out Property and the total amount of Interest Paid (minus) the amount of rent received can be claimed as a deduction.

Trust this clarifies your query. 

Feel free to get back/ call back in case of further details. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB - GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
719 Answers
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Dear Sir,

As per the information provided by you it appears that you bought the property in 2011 and the construction is completed in 2016. So if that is the case then I am Sorry to say but you cannot claim the benefit of Pre-Construction Period Interest as it can be claimed only if the House Property is completed within 3 years, which did not happen in your case.

Trust this clarifies your query. 

Feel free to get back/ call back in case of further details. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB - GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
719 Answers
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