To answer your questions:
1. The deduction of 30% is irrespective of actual expenses. However, the payment of property / municipal tax is over and above the deduction of 30%.
2. Yes, your understanding is correct. The amount of repayment of principal of home loan or Rs. 150,000, whichever is lower will be allowed as a deduction under section 80C of the Income-tax Act, 1961 ('Act').
3. The deduction of interest depends upon the nature of property. If it is self-occupied, then the deduction of interest will be the actual repayment of interest, subject to a maximum of Rs. 200,000. If the property is rented out, then there is no limit on the interest deduction.
Further, there is also a benefit of interest deduction of interest paid before the acquisition of property. This benefit accrues only after you get possession of the property. You may want to take that into consideration, if need be.
4. Yes, long term capital gain will be taxed at the rate of 20%. The sale consideration will be reduced by the indexed cost of acquisition, and the resultant profit / gain will be taxed at the rate of 20%.
For a property to be considered as a long term asset, the immovable property has to be held for a minimum of 2 years.
If you invest the amount of capital gain in a new residential property, then the gain will be exempt under section 54 of the Act. However, if you invest an amount lower than the capital gain, then the differential will be taxed at the rate of 20%.
You can club capital gain arising from multiple residential properties and invest in one residential property. Ensure that the total capital gains arising from all the properties is equal or less than the amount of new property.
Regarding your question "Are the exemptions considered for each property separately? For example, can
i use my net income from one property against loss in income from the 2nd property?". Could you please elaborate?
Is the net income you are referring to is capital gain or income from house property (i.e. house rented out or lying vacant)
M.Com., CA, LL.B