Income tax calculation on 2nd home loan

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  1. MahendraShiva

    MahendraShiva New Member

    Dear Sir,

    1. I bought an house in 2009. Took home loan and re- payed everything. No outstanding now. Prices was more than 50 Lakhs. Currently my parents are staying there. Rs 15,000 will be Notional rent amount / Month

    2. Bought ready possession second house (which is nearer to my office) in July 2014. This is owned by me and my wife. We are staying in this house. Home loan is 52 Lakhs. The interest component for this year is around 3.4 lakhs and 0.6 lakhs will be principal.

    a) can I show this home loan, as second home loan and claim tax deduction of about 3.5 lakhs - notional rent from first house?

    b) I got possession in july, will there be any wealth tax on it?
  2. rudrabose

    rudrabose Active Member

    1. Yes, you can show the interest of Rs. 3.4 Lakhs as Deduction.

    You would be having a loss under head House Property which would be showed as follows:-

    Notional Rent - Municipal Taxes - Interest = Loss from House Property

    This Loss would be required to be disclosed under Head House Property in your Income tax Return

    2. Practically speaking - people in India don't pay Wealth Tax nor does the govt say anything to people who don't pay Wealth Tax. So, you can ignore this.
  3. MahendraShiva

    MahendraShiva New Member

    Thank you Rudra Bose

    One more supplementary question

    1.Can I consider this as my first home loan and claim deductions 1.5 lakhs under 80 C and 2 lakhs under section 24.

    2. As mentioned in first question , I consider this as second home and show loss due to housing property and cliam deduction of Notional Rent - Municipal Taxes - Interest = Loss from House Property

    Off course 2 nd option is more profitable for me. But theoretically can someone consider either of the options?
    If yes, then second house offer more tax benefit than 1 st house..right?
  4. rudrabose

    rudrabose Active Member

    As per income tax act, as none of your houses are on rent - you can assume any 1 house as Self Occupied and the other one as Deemed Let Out i.e. Notional Rent.

    You can self compute that showing which house as Self Occupied is beneficial to you.
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