2 Home Loans and Letting out the home in the same city

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  1. logmein

    logmein New Member

    Dear Karan,

    I have posted about this on Manish's JI.com as well, pinging you as well for what I feel is a subjective issue.

    I have a queer situation.

    I had an older home loan for a flat in Mumbai when I was working there. Lets call it Loan 1. Then a few years down the line I had to shift to Goa branch of the same company for work and hence was forced to stay on rent. Claimed HRA and loan 1 benefits both for a while. All was good till this point.

    Now the twist is that I have finally bought a second home here in Goa. Lets call it loan 2. Now I mandatorily have to set one of my homes as Self Occupied and the other as Deemed Let out. In an ideal scenario the choice would have been straight forward by declaring home 2 (goa) as the self occupied one since it is in the same city of work and the other property in Mumbai (Loan 1) as Let out.

    But my problem is that this new home loan (loan 2) is bigger and hence a larger chunk of interest/ principal benefits ensue here as compared to loan 1. Would it be possible for me to state I live on rent here in Goa (rent agreeemtn with my in-laws can be executed if needed) since this new property (loan 2) is far off from place of work and thereby set THIS property (loan 2) as let out and file nominal rent and unlimited interest? the first home in that case should earn me max of 1.5L interest only and I am ok with that.

    Pls note I do not wish to claim HRA benefits in this scenario, only want to LET OUT the property in my city that happens to be out of a second home loan. Pls advise me if this would be possible.
  2. Karan Batra

    Karan Batra Well-Known Member

    The Income Tax Act says that where a person owns more than 1 property, he can claim 1 property as Self Occupied and the rest would be deemed to be let out. However, it is at the Sole Discretion of the taxpayer on which property he wants to show as Self Occupied.

    You can also show both of them as let out and stay on rent elsewhere. There won't be any problem in that...
    logmein likes this.
  3. logmein

    logmein New Member

    Thanks for the extremely prompt reply Karan.

    Would you have any idea about the Portuguese Civil Code law/ act that binds and calls for sharing of all income, assets etc between husband and wife? The reason I ask is because my accounts team only wants to credit me 50% of housing loan interest benefits (I need the max I can get) whilst my wife is being given the remaining 50% and she doesnt need it. I am originally from Mumbai and have been residing here since about 6 yrs now. My wife is a goan but I am not, so wondering if I am subject to come under the ambit of the act?
  4. Karan Batra

    Karan Batra Well-Known Member

    As per Portuguese Civil code, all Incomes are apportioned equally between Husband and Wife (except Income from Salary)

    However, I'm not sure whether it would apply in your case or not.
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