Income tax on second home

Hi,

The property in Chennai is still under Construction. So, you will not get any tax benefit from the House till the Financial Year in which you get the Possession Certificate. Pre-construction interest paid can be claimed as deduction in 5 equal installments from the year in which you get the Possession of the House.

Regarding tax treatment after the construction is completed, you can show House in Bhubaneshwar as self-occupied and treat the house in Chennai as Deemed let out and claim entire interest on housing loan by declaring standard rent in the area as rental income.

Hi,

Refer to the Standard rent for similar properties in the locality in Chennai

The rent prevailing in the neighbour hood

Dear Sir,

You can claim the entire pre-construction interest in five installments starting from the year in which you get the possession. Further, you will also get deduction of interest paid in each year after you get the possession subject to other conditions being satisfied.

Further, for the purpose of calculation of rent you can check the municipal valuation.

Please feel free to call/ revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Hi,

As an assessee can claim only one house as self occupied the other property which is not self occupied is assumed to be let out. To calculate notional rental income one has to get to know what is the fair market rate of rent in that area which is generally higher than the Muncipal rent rate. and on that basis he has to calculate his income from house property.

Additional to the above you can also claim entire interest amount as deduction, there is no cap limit of Rs 2 lakhs as is the case in self occupied property.

In case of second house if the house is yet to be constructed, 20% of the total interest paid during the pre-construction period is can also be claimed as tax deduction. There is a limit however here which means that this benefit on pre construction house is available for five years.

Hello Sir,

In such a case you will have to calculate the deemed rent of the flat and consider the same as Income from House Property after doing the thorough calculation.

Trust this clarifies your query.

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

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Hello Sir,

It is normal rent receivable from letting the property.

Trust this clarifies your query.

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

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP